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i always get confused while dealing with questions which involve years here is an example of such questions “a business pays rent quarterly in arreas in 31 march,31 sept,31 dec each year.the rent payable was 24000 per year to 31 july 2013 and increased to 27000 per year from 1 august.what would be rent payable on jan 2014”
could you please help me regarding these type of questionsThe question as you have typed it does not make any sense, because they do not pay any rent in January 2014. They only pay rent on 31 March, 30 June, 30 September, and 31 December.
If you are meaning how much needs accruing as at 31 January 2014, then since the last payment will have been on 31 December 2013 and will have covered October, November and December, then as at 31 January they will be owing for 1 month and the amount owing will be 1/12 x $27,000.
Have you watched my free lectures on accruals and prepayments? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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