• Profile photo of John Moffat says

      If you have watched the previous lectures, then to say you understand none of chapter 4 is a rather ridiculous comment – your other post elsewhere makes it clear that you do understand something.

      Have you watched the earlier lectures?

      Have you printed out the free Lecture Notes? There is no point in watching the lectures without the lecture notes in front of you because the examples that I am working through are from the Lecture Notes.

      It is obviously impossible (and unnecessary) to simply type out here the entire lecture. For any specific parts that you do not understand then ask in the Paper F3 Ask the Tutor Forum and I will try to help you.

      • avatar says

        I understand the earlier part, but I find it abit confusing. I have my lecture notes with me as well, I will go thru again the lecture again. Thanks for the advise,sir

      • avatar says

        Yes. I am being stupid again. For some strange reason I am thinking of rental expense and not income. Grr…. lack of concentration. I will get there. (Slaps self in face!)

      • Profile photo of John Moffat says

        No problem – that is by far the most common mistake :-)

        (Be careful in the exam – when you are rushing it is even more likely that you will think that. It is always with rent questions, so whenever you see rent mentioned always stop and check whether it is rent expense or rent income.)

    • Profile photo of John Moffat says

      For question 3:

      At the start of the year (30.4.2007) we had tenants who owed us 50,880 (their rent was in arrears, so they had not paid and were still owing us). They owed us, so there is a debit balance.
      Also, there were tenants who had paid us in advance – at the end of last year they had paid too much and so we owed them the money. Therefore a credit balance of 68,880.

      During the year we had received cash of 1,154,880 – so Dr Cash and Cr rental income.

      At the end of the year we need to end up with a debit balance of 44,160 and a credit balance of 74,880 (for the same reasons as the balances at the start of the year, and so these balances need carrying forward.

      The missing figure is the rental income for the year.

      You might find it easier without using a t-account:

      The cash received was 1154880
      However, part of the cash was the amount that was owed to us from last year (50,880). That is not this years income but last years and so we need to subtract it from the cash received.
      Also, some people had paid us last year for this years rent (68,880). Although we did not get the cash this year, it is this years income, so we need to add it to the cash received.
      At the end of this year, 44,160 still owe us rent – it is this years income but we have not received the cash, so add it to the cash received.
      At the end of this year, 74,880 had paid us next years rent. We have had the cash but it is not this years income, so subtract it from the cash received.

      If you add and subtract as above, then again you will come to the rental income earned this year.

      It is exactly the same for question 6 except obviously with different numbers :-)

  1. avatar says

    Around 11 Minutes 50 Seconds, you say credit accrual for reversal and debit expense. You enter it correctly but say it incorrectly… :-) Just thought Id give you a heads up.

  2. avatar says

    The Question is:

    Morias prepares its financial statements for the year end to 30 April each year.
    The company pays rent quarterly in advance on 1 Jan, 1 April, 1 July, and 1 October each year. The annual rent was 201, 600 per year until June 30 2008. it was increased to 230, 400 per year from that date.

    What is the rent expense and prepayment to be included in the statement of financial position for 30 April, 2009?

    Expense Prepayment
    A 223,200 19,200
    B 223,200 38,400
    C 225,600 9,200
    D 225,600 38,400
    ans is d but i didn’t understand how prepayment would be 38400 ???

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