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A Company Rents a Building with a Total of 50,000

question 2

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A company rents a building with a total of 50,000 square feet,which are evenly divided between two floors.The company allocates the rent for space on the first floor at twice the rate of space on the second floor.The total monthly rent for the building is $30,000.How much of the monthly rental expense should be allocated to a department that occupies 10,000 square feet on the second floor?

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholder members from its current or retained earnings.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.

Direct Method

A method of preparing the cash flow statement in which actual cash flow information from the company’s operations segment is used, instead of adjustments to net income.

Direct Method

A means of presenting the cash flow statement where cash receipts and cash payments from operating activities are listed directly.

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