Question

Divisional Income Statements

The following data were summarized from the accounting records for Ruiz Industries Inc. for the year ended November 30, 20Y8:

Cost of goods sold: Support department allocations:
Commercial Division $316,230 Commercial Division $43,120
Residential Division 163,680 Residential Division 28,350
Administrative expenses: Sales:
Commercial Division $57,500 Commercial Division $479,140
Residential Division 58,460 Residential Division 292,280
Prepare divisional income statements for Ruiz Industries Inc.

Ruiz Industries Inc.
Divisional Income Statements
For the Year Ended November 30, 20Y8
Commercial Division Residential Division
$ $
$ $
$ $
$ $

Answer 1

Answer and Explanation:

The Preparation of divisional income statements is following below:-

Ruiz Industries Inc.

Divisional Income Statements

For the Year Ended November 30, 2018

Commercial Division Residential Division

Sales a $479,140 $292,280

Cost of goods sold b $316,230 $163,680

Gross profit c = (a - b) $162,910 $128,600

Administrative expenses d $57,500 $58,460

Operating income $105,410 $70,140

(e = c - d)

Support department

allocations f $43,120 $28,350

Segment Income $62,290 $41,790

(g = e - f)

So, to reach at segment income we subtract the Support department allocations from operating income.