Prepare a schedule that reports on the revenues and profit of Segments A and B and the other…

Segment Reporting – Parks Conglomerate Company does business in several different industries. The following is a 2007 condensed income statement for the entire company:

Sales

$300,000

Less:

Cost of goods sold

$140,000

Depreciation expense

30,000

Other operating expenses

60,000

Total expenses

-230,000

Pretax income

$70,000

Income tax expense

-21,000

Net income

$49,000

Earnings per share (20,000 shares)

$2.45

Parks has two major operating segments, A and B. No other operating segment contributes 10% or more of the company’s activities. Segments A and B make no sales to each other or to the other segments of the company. An analysis reveals that $2,000 of the total depreciation expense and $6,000 of the total other operating expenses are related to general corporate activities. The remaining expenses and total revenues are directly allocable to segment activities according to the following percentages:

Percent Identified with

Segment A

Segment B

Other Segments

Sales

40%

46%

14%

Cost of goods sold

35

50

15

Depreciation expense

40

45

15

Other operating expenses

42

40

18

Required

Prepare a schedule that reports on the revenues and profit of Segments A and B and the other operating segments of the Parks Conglomerate Company for 2007. Be sure to reconcile these amounts with the related totals on the preceding income statement. Include notes summarizing the depreciation related to each operating segment and the computation of segment profits.

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