Question

Brock Corp. reports operating expenses in two categories: (1) selling and (2) general and administrative. The adjusted trial balance at December 31, 20X5 included the following expense and loss accounts:Accounting and legal fees $120,000Advertising 150,000Freight-out 80,000Interest 70,000Loss on the sale of long-term investments 30,000Officers' salaries 225,000Rent for office space 220,000Sales salaries and commissions 140,000One-half of the rented premises is occupied by the sales department.Brock's total selling expenses for 20X5 are:A. $480,000B. $400,000C. $370,000D. $360,000

Answer 1

Answer:

A: $ 480,000

Explanation:

We have to categorise the various expenses into selling and General and administrative expenses.

                                                                   Selling               General $ Admin.

                                                                   Expenses           Expenses

                                                                          $                         $

Accounting and Legal Fees                                                      120,000

Advertising                                                  150,000

Freight Out                                                   80,000

Interest                                                                                          70,000

Loss on sale of long term investments                                       30,000

Officers salaries                                                                          225,000

Sales salaries and commissions                140,000

Rent for office space                                   110,000                   110,000

Totals                                                            480,000                  480,000

All expenses directly related to selling activities such as advertising, Freight Out on goods sold, Salesmen salaries and commissions are categorized as such. The question gives information regarding the utilization of office space and thus rent is divided in the given proportion.

All other expenses are either financial or purely administrative. The officers salaries have been classified as admin. sine separate selling salaries have been provided.