Glades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

Sales—Winter Sports Division $25,200,000

Sales—Summer Sports Division 27,840,000

Cost of Goods Sold—Winter Sports Division 15,120,000

Cost of Goods Sold—Summer Sports Division 16,080,000

Sales Expense—Winter Sports Division 4,320,000

Sales Expense—Summer Sports Division 3,840,000

Administrative Expense—Winter Sports Division 2,520,000

Administrative Expense—Summer Sports Division 2,472,000

Advertising Expense 958,000

Transportation Expense 419,900

Accounts Receivable Collection Expense 279,000

Warehouse Expense 2,400,000

The bases to be used in allocating expenses, together with other essential information, are as follows:

Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $450,000; Summer Sports Division, $508,000.

Transportation expense—charged back to divisions at a charge rate of $13 per bill of lading: Winter Sports Division, 15,400 bills of lading; Summer Sports Division, 16,900 bills of lading.

Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 14,300 sales invoices; Summer Sports Division, 16,700 sales invoices.

Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 130,000 square feet; Summer Sports Division, 170,000 square feet.

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.

Glades Sporting Goods Co.

Divisional Income Statements

For the Year Ended December 31, 20Y8

Winter Sports Division Summer Sports Division

Sales $fill in the blank 950457fcffe9fec_1 $fill in the blank 950457fcffe9fec_2

Cost of goods sold fill in the blank 950457fcffe9fec_3 fill in the blank 950457fcffe9fec_4

Gross profit $fill in the blank 950457fcffe9fec_5 $fill in the blank 950457fcffe9fec_6

Divisional selling and administrative expenses:

Divisional selling expenses $fill in the blank 950457fcffe9fec_7 $fill in the blank 950457fcffe9fec_8

Divisional administrative expenses fill in the blank 950457fcffe9fec_9 fill in the blank 950457fcffe9fec_10

Total divisional selling and administrative expenses $fill in the blank 950457fcffe9fec_11 $fill in the blank 950457fcffe9fec_12

Income from operations before service department charges $fill in the blank 950457fcffe9fec_13 $fill in the blank 950457fcffe9fec_14

Service department charges:

Advertising expense $fill in the blank 950457fcffe9fec_15 $fill in the blank 950457fcffe9fec_16

Transportation expense fill in the blank 950457fcffe9fec_17 fill in the blank 950457fcffe9fec_18

Accounts receivable collection expense fill in the blank 950457fcffe9fec_19 fill in the blank 950457fcffe9fec_20

Warehouse expense fill in the blank 950457fcffe9fec_21 fill in the blank 950457fcffe9fec_22

Total service department charges $fill in the blank 950457fcffe9fec_23 $fill in the blank 950457fcffe9fec_24

Income from operations $fill in the blank 950457fcffe9fec_25 $fill in the blank 950457fcffe9fec_26

Provide supporting schedules for determining service department charges. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Glades Sporting Goods Co.

Service Department Charges

For the Year Ended December 31, 20Y8

Winter Sports Division Summer Sports Division Total

Advertising expense $fill in the blank 40aef3f62fa4fb8_1 $fill in the blank 40aef3f62fa4fb8_2 $fill in the blank 40aef3f62fa4fb8_3

Transportation rate per bill of lading $fill in the blank 40aef3f62fa4fb8_4 $fill in the blank 40aef3f62fa4fb8_5

Number of bills of lading fill in the blank 40aef3f62fa4fb8_6 fill in the blank 40aef3f62fa4fb8_7

Transportation expense $fill in the blank 40aef3f62fa4fb8_8 $fill in the blank 40aef3f62fa4fb8_9 $fill in the blank 40aef3f62fa4fb8_10

Accounts receivable collection rate $fill in the blank 40aef3f62fa4fb8_11 $fill in the blank 40aef3f62fa4fb8_12

Number of sales invoices fill in the blank 40aef3f62fa4fb8_13 fill in the blank 40aef3f62fa4fb8_14

Accounts receivable collection expense $fill in the blank 40aef3f62fa4fb8_15 $fill in the blank 40aef3f62fa4fb8_16 $fill in the blank 40aef3f62fa4fb8_17

Warehouse rate per sq. ft. $fill in the blank 40aef3f62fa4fb8_18 $fill in the blank 40aef3f62fa4fb8_19

Number of square feet fill in the blank 40aef3f62fa4fb8_20 fill in the blank 40aef3f62fa4fb8_21

Warehouse expense $fill in the blank 40aef3f62fa4fb8_22 $fill in the blank 40aef3f62fa4fb8_23 $fill in the blank 40aef3f62fa4fb8_24

Question

Glades Sporting Goods Co. operates two divisions—the Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y8, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted:

Sales—Winter Sports Division	$25,200,000
Sales—Summer Sports Division	27,840,000
Cost of Goods Sold—Winter Sports Division	15,120,000
Cost of Goods Sold—Summer Sports Division	16,080,000
Sales Expense—Winter Sports Division	4,320,000
Sales Expense—Summer Sports Division	3,840,000
Administrative Expense—Winter Sports Division	2,520,000
Administrative Expense—Summer Sports Division	2,472,000
Advertising Expense	958,000
Transportation Expense	419,900
Accounts Receivable Collection Expense	279,000
Warehouse Expense	2,400,000

The bases to be used in allocating expenses, together with other essential information, are as follows:

Advertising expense—incurred at headquarters, charged back to divisions on the basis of usage: Winter Sports Division, $450,000; Summer Sports Division, $508,000.
Transportation expense—charged back to divisions at a charge rate of $13 per bill of lading: Winter Sports Division, 15,400 bills of lading; Summer Sports Division, 16,900 bills of lading.
Accounts receivable collection expense—incurred at headquarters, charged back to divisions at a charge rate of $9 per invoice: Winter Sports Division, 14,300 sales invoices; Summer Sports Division, 16,700 sales invoices.
Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Winter Sports Division, 130,000 square feet; Summer Sports Division, 170,000 square feet.

Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Do not round your interim calculations.

Glades Sporting Goods Co.
Divisional Income Statements
For the Year Ended December 31, 20Y8
	Winter Sports Division	Summer Sports Division
Sales	$fill in the blank 950457fcffe9fec_1	$fill in the blank 950457fcffe9fec_2
Cost of goods sold	fill in the blank 950457fcffe9fec_3	fill in the blank 950457fcffe9fec_4
Gross profit	$fill in the blank 950457fcffe9fec_5	$fill in the blank 950457fcffe9fec_6
Divisional selling and administrative expenses:
Divisional selling expenses	$fill in the blank 950457fcffe9fec_7	$fill in the blank 950457fcffe9fec_8
Divisional administrative expenses	fill in the blank 950457fcffe9fec_9	fill in the blank 950457fcffe9fec_10
Total divisional selling and administrative expenses	$fill in the blank 950457fcffe9fec_11	$fill in the blank 950457fcffe9fec_12
Income from operations before service department charges	$fill in the blank 950457fcffe9fec_13	$fill in the blank 950457fcffe9fec_14
Service department charges:
Advertising expense	$fill in the blank 950457fcffe9fec_15	$fill in the blank 950457fcffe9fec_16
Transportation expense	fill in the blank 950457fcffe9fec_17	fill in the blank 950457fcffe9fec_18
Accounts receivable collection expense	fill in the blank 950457fcffe9fec_19	fill in the blank 950457fcffe9fec_20
Warehouse expense	fill in the blank 950457fcffe9fec_21	fill in the blank 950457fcffe9fec_22
Total service department charges	$fill in the blank 950457fcffe9fec_23	$fill in the blank 950457fcffe9fec_24
Income from operations	$fill in the blank 950457fcffe9fec_25	$fill in the blank 950457fcffe9fec_26

Provide supporting schedules for determining service department charges. If required, round per unit amounts to two decimal places and final answers to the nearest dollar.

Glades Sporting Goods Co.
Service Department Charges
For the Year Ended December 31, 20Y8
	Winter Sports Division	Summer Sports Division	Total
Advertising expense	$fill in the blank 40aef3f62fa4fb8_1	$fill in the blank 40aef3f62fa4fb8_2	$fill in the blank 40aef3f62fa4fb8_3
Transportation rate per bill of lading	$fill in the blank 40aef3f62fa4fb8_4	$fill in the blank 40aef3f62fa4fb8_5
Number of bills of lading	fill in the blank 40aef3f62fa4fb8_6	fill in the blank 40aef3f62fa4fb8_7
Transportation expense	$fill in the blank 40aef3f62fa4fb8_8	$fill in the blank 40aef3f62fa4fb8_9	$fill in the blank 40aef3f62fa4fb8_10
Accounts receivable collection rate	$fill in the blank 40aef3f62fa4fb8_11	$fill in the blank 40aef3f62fa4fb8_12
Number of sales invoices	fill in the blank 40aef3f62fa4fb8_13	fill in the blank 40aef3f62fa4fb8_14
Accounts receivable collection expense	$fill in the blank 40aef3f62fa4fb8_15	$fill in the blank 40aef3f62fa4fb8_16	$fill in the blank 40aef3f62fa4fb8_17
Warehouse rate per sq. ft.	$fill in the blank 40aef3f62fa4fb8_18	$fill in the blank 40aef3f62fa4fb8_19
Number of square feet	fill in the blank 40aef3f62fa4fb8_20	fill in the blank 40aef3f62fa4fb8_21
Warehouse expense	$fill in the blank 40aef3f62fa4fb8_22	$fill in the blank 40aef3f62fa4fb8_23	$fill in the blank 40aef3f62fa4fb8_24

Accepted Answer

Divisional Income Statement is a statement which shows the profit or loss of each division or…