Lesson Plan 8.4 – Financial Reporting for Departmentalized
Business
Course Title – Accounting II
Lesson Title – Financial Reporting for Departmentalized Business
Specific Objective - Understand concepts, procedures, and applications
related to the financial reporting for a departmentalized business.
Performance Objectives:
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Identify accounting concepts and practices related to financial reporting for a
departmental business;
Prepare interim departmental statement of gross profit;
Prepare a work sheet for a departmentalized business;
Prepare financial statements for a departmentalized business;
Analyze financial statements using selected component percentages;
Complete end-of-period work for a departmentalized business;
Define accounting terms related to the lesson.
TEKS: 130.167.c.
1 – use equations, graphical representations, accounting tools, strategies, and
systems in real-world situations to maintain, monitor, control, and plan the use of
financial resources. The student is expected to communicate how accounting
procedures affect financial statements.
2.F-H – understand that internal accounting controls exist to ensure the proper
recording of financial transactions; complete a work sheet for a corporation;
generate an income statement for a corporation;
J – produce a balance sheet for a corporation.
TAKS: R1, M9, M10
Preparation
Materials Needed:
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Overhead projector
Century 21’s Textbook, Chapter 4.
Glencoe’s Textbook, Chapter 18, and Demonstration Problems
Accounting software and spreadsheet software
Sponge/Focus Activity:
Accounting in Your Career, in Century 21’s Textbook
Lesson Plan 8.4 – Financial Reporting for
Departmentalized Business
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Lesson Content:
See Century 21’s Textbook, Chapter 4. Here is an outline:
I.
II.
III.
IV.
Interim departmental statement of gross profit
A. Departmental statement of gross profit
B. Estimating ending merchandise inventory
C. Interim departmental statement of gross profit
D. Analyzing an interim departmental statement of gross profit
E. Cost of merchandise sold and gross profit percentages
F. Determining acceptable levels of performance
Preparing a work sheet for a departmental business
A. Proving the accuracy of posting to subsidiary ledgers
B. Trial balance and adjustments columns
C. Departmental work sheet
1.
Merchandise inventory adjustments
2.
Supplies adjustments
3.
Prepaid insurance adjustment
4.
Depreciation expense adjustments
5.
Federal income tax expense adjustment
D. Balance sheet columns of a work sheet
E. Income statement columns of a work sheet
F. Net income on a work sheet
G. Net loss on a work sheet
Financial statements for a departmentalized business
A. Departmental statement of gross profit
B. Target component percentages
C. Income statement
D. Calculating component percentages
E. Statement of stockholders’ equity
F. Balance sheet
End-of-period work for a departmentalized business
A. Journalizing adjusting entries for a departmentalized business
B. Journalizing closing entries for a departmentalized business
C. Explanation of closing entries
D. Post-closing trial balance for a departmentalized business
E. Summary of accounting cycle
Teaching Strategies:
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With the Century 21 textbook, complete the Work Together problems as a
class, then let your students finish the On Your Own problems by themselves
and go over the answers together.
Glencoe’s Demonstration Problems.
Assessment:

For problems you can use Peachtree Accounting from Glencoe, Glencoe
Lesson Plan 8.4 – Financial Reporting for
Departmentalized Business
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II
Accounting Software, Century 21 Accounting Software, or a spreadsheet.
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From Century 21’s Textbook
o Guided Practice
 Work Together: Preparing an interim departmental
statement of gross profit
 On Your Own: Preparing an interim departmental statement
of gross profit
 Work Together: Analyzing adjusting entries
 On Your Own: Analyzing adjusting entries
 Work Together: Preparing an income statement with
component percentages
 On Your Own: Preparing an income statement with
component percentages
 Work Together: Journalizing closing entries
 On Your Own: Journalizing closing entries
o Independent Practice
 4-1 Estimating ending merchandise inventory
 4-2 Preparing an interim departmental statement of gross
profit; calculating component percentages
 4-3 Preparing subsidiary schedules
 4-4 Calculating and analyzing component percentages for
total operating expenses
 4-5 Completing a work sheet for a departmentalized
business,
 4-6 preparing financial statements for a departmentalized
business,
 4-7 Journalizing adjusting and closing entries for a
departmentalized business
 4-8 Preparing end-of-fiscal period work for a
departmentalized business
 4-9 Preparing a 10-column work sheet for a
departmentalized business
o Additional Activities: Applied Communication, and Cases for
Critical Thinking
o Open Notes and textbook Quiz: Study Guide for Chapter
From Glencoe’s Textbook Problems: A combination of Lessons 1-4.
o Guided Practice
 18-1 Determining Gross Profit on Sales
 18-2 Allocating Rent Expense
 18-3 Analyzing a Source Document
 18-4 Determining Contribution Margin
o Independent Practice
 18-5 Calculating Contribution Margins
 18-6 Reporting Departmental Gross Profit on Sales
 18-7 Reporting Contribution Margins and Net Income
Lesson Plan 8.4 – Financial Reporting for
Departmentalized Business
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II

18-8 Allocating Expenses and Completing a Departmental
Work Sheet
 18-9 Reporting Contribution Margins and Net Income
 18-10 Evaluating a Department’s Contribution Margin
o Additional Activities: Using Key Terms, Understanding Accounting
Concepts and Procedures, Case Study, Conducting an Audit with
Alex, Internet Connection, and Workplace Skills
o Open Notes and textbook Quiz: Study Guide for Chapter
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This lesson is also assessed through the Unit Test at the end of the Unit.
Additional Resources:
Textbooks:
Guerrieri, Donald J., F. Barry Haber, William B. Hoyt, and Robert E. Turner,
Glencoe Accounting Real-World Applications & Connections, Advanced
Course, Fourth Edition, Glencoe McGraw-Hill: New York, New York.
Ross, Kenton E., CPA, Mark W. Lehman, CPA, Claudia Bienias Gilbertson, CPA,
Robert D. Hanson, Century 21 Accounting Advanced, Anniversary Edition,
Thomson South-Western: Mason, OH, 2003.
Multimedia:
Century 21’s Teacher Resource CD
Websites:
http://accounting.swpco.com
Lesson Plan 8.4 – Financial Reporting for
Departmentalized Business
Copyright
© Texas Education Agency, 2011. All rights reserved.
ACCOUNTING II