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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

La Hacienda Company has two departments: Furniture and Lighting. La Hacienda’s accountant prepares an adjusted trial balance (shown below) at the end of the fiscal year.

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The trial balance is prepared after all adjustments, including the adjustments for merchandise inventory, have been recorded and posted.

Merchandise inventories at the beginning of the year were as follows: Furniture Department, $83,850; Lighting Department, $42,630. The bases (and sources of figures) for apportioning expenses to the two departments are as follows (rounded to the nearest dollar):

  • Sales Salary Expense (payroll register): Furniture Department, $74,800; Lighting Department, $48,420
  • Advertising Expense (newspaper column inches): Furniture Department, 600 inches; Lighting Department, 400 inches
  • Depreciation Expense, Store Equipment (property and equipment ledger): Furniture Department, $9,616; Lighting Department, $3,820
  • Store Supplies Expense (requisitions): Furniture Department, $418; Lighting Department, $324
  • Miscellaneous Selling Expense (volume of gross sales): Furniture Department, $408; Lighting Department, $272
  • Rent Expense and Utilities Expense (floor space): Furniture Department, 2,500 square feet; Lighting Department, 1,500 square feet
  • Bad Debts Expense (volume of gross sales): Furniture Department, $1,080; Lighting Department, $720
  • Miscellaneous General Expense (volume of gross sales): Furniture Department, $492; Lighting Department, $328

Required

Prepare an income statement by department to show income from operations, as well as a nondepartmentalized income statement (using the Total columns) to show net income for the entire company.

Check Figure

Net Income, $76,442

To determine

Prepare an income statement for LH Company by department, and non-departmentalized (total) income statement for the year ended January 31, 20--.

Explanation

Income statement: The financial statement which reports revenues and expenses from business operations and the result of those operations as net income or net loss for a particular time period is referred to as income statement.

Prepare an income statement for LH Company by department, and non-departmentalized (total) income statement for the year ended January 31, 20--...

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