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1 April, 15:50

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

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  1. 1 April, 16:07
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    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.
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