Question

The office space is used equally by Dye's sales and accounting departments. What amount of the above-listed items should be classified as general and administrative expenses in Dye's multiplestep income statement?

Answer 1

Answer:

$940,000

Explanation:

The computation of the general and administrative expense is shown below:

= Legal and audit fees + rent for office space × basis

= $580,000 + $720,000 × 50%

= $580,000 + $360,000

= $940,000

In order to find out the general and administrative expense we simply added the legal & audit fees and the rent for office space so that the correct amount could arrive