(CO C) Blue Corp. reports operating expenses in two categories: (1) selling and

Question

(CO C) Blue Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 201X included the following expense accounts. Accounting and legal fees Advertising Freight-out $150,000 $125,000 s65,000 Interest s80,000 Loss on sale of long-term investments S35,000 Officers' salaries 200,000 Rent for office space S160,000 Sales salaries and co mmissions S110,000 One half of the rented premises are occupied by the sales department. How much of the expenses listed above should be included in Perry's general and administrative expenses for 201X?

Explanation / Answer

General and Administrative Expenses are those expenses which are incurred to administer the business. It determines fixed cost structure of a business. Expenses those are included in Perry's general and administrative expenses for 201X are listed below:

Particulars Amount in $ Accounting and Legal Expenses 150000 Interest 80000 Loss on sale of long term investments 35000 Officer's salary 200000 Rent for office space 160000 Total 625000 No matter that one half of rented premises are occupied by sales department, the whole of rent payable is included in general and administrative expense

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