two part problem please help

Problem 10-6A Analyzing possible elimination of a department LO P4 [The following information applies to the questions displayed below) Elegant Decor Company's management is trying to decide whether to eliminate Department 200, which has produced losses or low profits for several years. The company's departmental income statements show the following. ELEGANT DECOR COMPANY Departmental Income Statements For Year Ended December 31, 2019 Dept. 100 Dept. 200 Combined Sales $444,000 $288,000 $732,000 Cost of goods sold 269.00 212.eee 481,000 Gross profit 175,000 76,000 251,000 Operating expenses Direct expenses Advertising 17,500 13,500 31,000 Store supplies used 4,500 4,100 8,600 Depreciation-Store equipment 5,000 3,500 8,500 Total direct expenses 27,000 21,100 48,100 Allocated expenses Sales salaries 65,000 39,000 104,000 Rent expense 9,460 4,730 14,199 Bad debts expense 9,800 7,800 17,600 office salary 15,600 10,400 26,000 Insurance expense 1,700 900 2,600 Miscellaneous office expenses 2,500 1,300 Total allocated expenses 104,060 64,630 168,690 Total expenses 131,060 85,730 216,790 Net Income (los) $ 43,940 $ (9,730) $ 34,210 42 Insurance expense Miscellaneous office expenses Total allocated expenses Total expenses Net income (loss) 1,700 2,50 184,060 131,060 $ 43,940 960 1,800 64,630 85,730 $ (9,730) 2,600 4,300 168, 690 216,790 $ 34,210 In analyzing whether to eliminate Department 200, management considers the following: a. The company has one office worker who earns $500 per week, or $26,000 per year, and four salesclerks who each earns $500 per week, or $26,000 per year for each salesclerk. b. The full salaries of two salesclerks are charged to Department 100. The full salary of one salesclerk is charged to Department 200. The salary of the fourth clerk, who works half-time in both departments, is divided evenly between the two departments c. Eliminating Department 200 would avoid the sales salaries and the office salary currently allocated to it. However, management prefers another plan. Two salesclerks have indicated that they will be quitting soon Management believes that their work can be done by the other two clerks if the one office worker works in sales half-time. Eliminating Department 200 will allow this shift of duties. If this change is implemented, half the office worker's salary would be reported as sales salaries and half would be reported as office salary. d. The store building is rented under a long-term lease that cannot be changed. Therefore, Department 100 will use the space and equipment currently used by Department 200. e. Closing Department 200 will eliminate its expenses for advertising, bad debts, and store supplies, 73% of the insurance expense allocated to it to cover its merchandise inventory, and 16% of the miscellaneous office expenses presently allocated to it. Required information 1. Complete the following report snowing total expenses, expenses that would be eliminated by CIOsing Department 200 ana the expenses that would continue. The statement should reflect the reassignment of the office worker to one-half time as salesclerk 3 ELEGANT DECOR COMPANY Analysis of Expenses under Elimination of Department 200 Total Eliminated Continuing Expenses Expenses Expenses ces Direct expenses Advertising Store supplies used DepreciationStore equipment Allocated expenses Sales salaries Rent expense Bad debts expense Office salary Insurance expense Miscellaneous office expenses Total expenses $ 0$ 0$ Required information 2. Prepare a forecasted annual income statement for the company reflecting the elimination of Department 200 assuming that it will not affect Department 100's sales and gross profit. The statement should reflect the reassignment of the office worker to one-half time as a salesclerk. ELEGANT DECOR COMPANY Forecasted Annual Income Statement Under Plan to Eliminate Department 200 0 Operating expenses Required information 0 Operating expenses Total operating expenses 0 $ $ 0