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Difficulty: EasyPreparation of Departmental Trading, Profit and Loss Accounts

Graceful Fashions operates two departments: Clothing and Footwear. For the year ended 31 December 2025, the total rent expense incurred by the business was N120,000\text{N} 120,000. Rent expense is apportioned between departments based on floor area occupied. If the Clothing Department occupies 600 m2600\text{ m}^2 and the Footwear Department occupies 400 m2400\text{ m}^2, what is the amount of rent (in Naira) apportioned to the Clothing Department?

Answer: 72000 Naira

Answer

The amount of rent apportioned to the Clothing Department is 72,000 Naira.
Total floor area is 600 m2+400 m2=1,000 m2600\text{ m}^2 + 400\text{ m}^2 = 1,000\text{ m}^2. The Clothing Department occupies 6001,000=60%\frac{600}{1,000} = 60\% of the space. Apportioned rent for Clothing is 60%×N120,000=N72,00060\% \times \text{N} 120,000 = \text{N} 72,000.

Step-by-Step Solution

1
Calculate total floor area occupied by both departments.
Total floor area = 1,000 square meters.
The total area forms the denominator for the apportionment ratio.
2
Calculate the proportion of total floor area used by the Clothing Department.
Proportion = 600 / 1,000 = 3/5 or 0.60.
Rent is allocated according to the ratio of space occupied.
3
Multiply total rent by the Clothing Department's proportion.
Apportioned Rent = 0.60 x 120,000 = 72,000 Naira.
This calculates the specific rent expense attributable to the Clothing Department.

Key Concept

Apportionment of departmental expenses using floor area as a basis.
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Topics

Preparation of Departmental Trading, Profit and Loss Accounts

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