1. Elgin Flooring Company sells floor coverings through two deroamspartments, carpeting and hard covering (tile and linoleum). Operating information for 2016 appears below.

Common operating expenses of the firm were \($120,000\).
Required

a. Prepare a departmental income statement showing departmental contribution to common expenses and net income of the firm. Assume an overall effective income tax rate of 35%. Elgin uses a periodic inventory system.
b.Calculate the gross profit percentage for each department.

c. If the common expenses were allocated 60% to the carpeting department and 40% to the hard covering department, what would the net income be for each department?

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Inventory, January 1, 2016... Inventory, December 31, 2016..... Net sales... Purchases... Purchases returns Carpeting Department $ 60,000 50,000 Hard Covering Department $ 26,000 30,000 780,000 480,000 484,000 362,000 28,000 8,000 Purchases discounts 16,000 4,000 Transportation in 18,000 14,000 Traceable departmental expenses. 108,000 56,000