Williams Company began operations in January 2015 with two operating (selling) departments and one service (office) department. Its departmental income statements follow.

Williams plans to open a third department in January 2016 that will sell paintings. Management predicts that the new department will generate $50,000 in sales with a 55% gross profit margin and will require the following direct expenses: sales salaries, $8,000; advertising, $800; store supplies, $500; and equipment depreciation, $200. It will fit the new department into the current rented space by taking some square footage from the other two departments. When opened the new painting department will fill one-fifth of the space presently used by the clock department and one-fourth used by the mirror department. Management does not predict any increase in utilities costs, which are allocated to the departments in proportion to occupied space (or rent expense). The company allocates office department expenses to the operating departments in proportion to their sales. It expects the painting department to increase total office department expenses by $7,000. Since the painting department will bring new customers into the store, management expects sales in both the clock and mirror departments to increase by 8%. No changes for those departments€™ gross profit percents or their direct expenses are expected except for store supplies used, which will increase in proportion to sales.
Required
Prepare departmental income statements that show the company€™s predicted results of operations for calendar year 2016 for the three operating (selling) departments and their combined totals. (Round percents to the nearest one-tenth and dollar amounts to the nearest whole dollar.)

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WILLIAMS COMPANY Departmental Income Statements For Year Ended December 31,2015 Sales Cost of goods sold... Gross profit.... Direct expenses Clock Mirror Combined 130,000 $55,000 $185,000 97,800 87,200 63,700 34,100 .66,300 20,900 27,000 1,700 1,300 1,800 31,800 Sales salaries . Advertising 20,000 7,000 500 I,200 supplies used 1,500 300 Depreciation Equipment Total direct expenses 23,600 8,200 Allocated expenses Rent expense Ueilities expense Share of office department expenses Total allocated expenses 10,800 4,000 15,000 29,800 61,600 22,580 $ 3,020 25,600 7,020 2,600 0,500 20,120 3,780 1,400 9,680 43,720 7,880 Total expenses Net income