Zeus and Company's income statement for the year ended December 31,2014,included the following items: The office space is used equally by Zeus' sales and accounting departments.What amount of the above-listed items should be classified as general and administrative expenses in Zeus' multiple-step income statement?

Question

Zeus and Company's income statement for the year ended December 31,2014,included the following items:  The office space is used equally by Zeus' sales and accounting departments.What amount of the above-listed items should be classified as general and administrative expenses in Zeus' multiple-step income statement?

Quizplus · Accepted Answer

The rent expense should be classified as a general and administrative expense because it benefits both the sales and accounting departments equally. Therefore, only $870,000 ($1,450,000 x 60%) should be classified as general and administrative expenses. The other expenses should be classified according to their respective functions (i.e. selling expenses or cost of goods sold).

Zeus and Company's Income Statement for the Year Ended December