The following items were among those that were reported on Nen Co.'s income statement for the year ended December 31, 2007: $$\begin{array} { l r }
\text { Legal and audit fees } & \$ 130,000 \
\text { Rent for office space } & 180,000 \
\text { Interest on inventory floor plan } & 210,000 \
\text { Loss on abandoned equipment used in operations } & 35,000
\end{array}$$ The office space is used equally by Nen's sales and accounting departments.What amount of the above-listed items should be classified as general and administrative expenses in Nen's multiple-step income statement?
A)$220,000.
B)$255,000.
C)$310,000.
D)$430,000.

Question

The following items were among those that were reported on Nen Co.'s income statement for the year ended December 31, 2007: $$\begin{array} { l r } 
\text { Legal and audit fees } & \$ 130,000 \
\text { Rent for office space } & 180,000 \
\text { Interest on inventory floor plan } & 210,000 \
\text { Loss on abandoned equipment used in operations } & 35,000
\end{array}$$ The office space is used equally by Nen's sales and accounting departments.What amount of the above-listed items should be classified as general and administrative expenses in Nen's multiple-step income statement?
A)$220,000.
B)$255,000.
C)$310,000.
D)$430,000.

Quizplus · Accepted Answer

Legal and audit fees and rent for office space are general and administrative expenses. Rent for office space is used equally by Nen's sales and accounting departments, so half of the rent expense should be classified as general and administrative expenses. Therefore, the total amount of general and administrative expenses is $130,000 + $90,000 = $220,000.

The Following Items Were Among Those That Were Reported on Nen