Rugged Rooms Ltd is a rug and drapery retailer. Rugged Rooms specialises in selling floor rugs and window dressings. The following information was derived from the shop’s accounting records for the year ended 30 June 2020.

Required

(a) Prepare a departmental income statement showing the departmental gross profit for each department and the store’s profit for the year.

(b) Calculate the gross profit percentage for each department.

(c) Prepare a departmental income statement that shows the profit of each department after the indirect expenses are allocated on the basis of gross profit.

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Net sales Purchases Purchase returns Direct expenses Floor rugs $532000 259200 3600 156000 193 400 Window dressings $456 000 328 320 3 800 78 500 Inventory, 1 July 2019 149 200 Inventory, 30 June 2020 202 600 148 900 Indirect expenses are $146800 per year.