Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883



Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Divisional income statements with service department charges
Power Sports Company has two divisions. Wholesale and Retail, and two corporate service departments. Tech Support and Accounts Payable. The corporate expenses for the year ended December 31, 20Y7, are as follows

The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Accounts Payable Department charges divisions for services, based on the numlver of checks issued. The usage of service by the two divisions is as follows

The service department charges of the Tech Support Department and the Accounts Payable Department are considered controllable by the divisions. Corporate administrative expenses arc-not considered controllable by the divisions. The revenues, cost of goods sold, and operating expenses for the twit divisions are as follows

Prepare the divisional income statements lor the two divisions.

To determine

Concept Introduction:

Income Statement: It shows the income of organization of a particular period. In this statement we reduce all type of expenses from the revenue of the firm.

To Prepare:

Make income statement of the organization on department wise.


For calculating the other operating expenses we use the following table.

    Trade Support213750641250855000

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