Question

The following expenses were incurred by a merchandising business during the year. In which expense section of the income statement should each be reported: (a) selling, (b) administrative, or (c) other?

• Advertising expense

• Depreciation expense on store equipment

• Insurance expense on office equipment

• Interest expense on notes payable

• Rent expense on office building

• Salaries of office personnel

• Salary of sales manager

• Sales supplies used

Answer 1

1. Advertising expenses = Selling Expenses

2. Depreciation expenses on store equipment = Administrative Expenses

3. Insurance Expenses = Administrative Expenses

4. Interest Expenses on Notes payable = Others

5. Rent expenses on office building = Administrative Expenses

6. Salaries of office personal = Administrative Expenses

7. Salaries of Sales Manager = Selling Expenses

8. Sales supplies used = Selling Expenses

Answer 2

Particulars Expenses Section Selling Advertising expense Depreciation Expense on store equipment Inailllartex.xp"『11% י on office hjulpriteri: Interest expenses Rent expense on office personnel salaries of office personnel Salary of sales manager Sales Supplies used Selling Adminisirai.ive Others Administrative Administrative Selling Selling on notes payable