Question

The following items were among those that were reported on Dye Co.'s income statement for the year ended December 31, 2014:

Legal and audit fees $520,000
Rent for office space 720,000
Interest on inventory floor plan 840,000
Loss on abandoned equipment used in operations 140,000
The office space is used equally by Dye's sales and accounting departments. What amount of the above-listed items should be classified as general and administrative expenses in Dye's multiple-step income statement?
a. $880,000
b. $1,020,000
c. $1,240,000
d. $1,720,000

Answer 1

In Dye Co.'s multiple-step income statement, the general and administrative expenses include legal and audit fees, rent for office space, and the portion of interest on the inventory floor plan related to the office space. The total amount of these items is $1,080,000.

Step-by-step explanation:

In Dye Co.'s multiple-step income statement, the general and administrative expenses include the following items:

1. Legal and audit fees ($520,000)
2. Rent for office space ($720,000)
3. The portion of the interest on inventory floor plan related to the office space (half of $840,000)

The total amount of these items is $1,080,000. Therefore, the correct answer is $1,080,000, which is not among the given options. It seems that none of the options provided are correct.