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Sir pls help look at this qtn; Troy co has a property rental business and received cash totalling $838600 from tenants during the year ended 31 DEC 20×6. Figures for rent in advance and arrears at the beginning and end of the year were:
31 DEC 31 DEC
20×5 20×6
Rent advance. 102600. 88700.
Rent arrears. 42300. 48400
What amount shd appear in SPL for the year ended 31 DEC 20×6?This qtn is from a Kaplan exam kit. They use a T account to solve it. But I don’t knw why they solved it that way. 42300 was the b/f and they chose 88700 as the c/f- all on the Dr side. Then 48400 was the b/f on the cr side and 102600 was c/f balance in cr side. Total amt was on the cr side. Sir pls explain why this is so.
Another qtn : in the yr ended 31 DEC 20×6, Lesley received from her 2 properties $400000. Balances on prepaid and accrued accounts were as follows:
31 DEC 20×6 20×5Property 1. 13400dr. 12300 cr
Property 2. 6700cr. 5400dr
What amount should be credited to the SPL for the year ended 31 DEC 20×6?They use a T- account to solve this also.the b/f balance on the Dr side was 5400 and c/,f was 6700. And then 13400 was the b/f balance on the cr side and c/,f balance was 12300 on cr side.sir why did they start with property 2 instead of 1?kindly explain to me in detail Sir I am confused here with the arrangements. Or is there a better way to solve it?pls help!
As far as the first question is concerned:
They are receiving rent (not paying it), and so at the start of the year they were owed the rent in arrears and so a debit balance on the account.
The rent in advance meant that the customer had paid too much rent for the previous year and so the business was owing the money back at the start of this year – so a credit balance.The cash received from the customer this year: Dr Cash Cr Rent receivable.
The same logic applies to your second question 🙂
Please can you tell me why the answer to this question is £1700
This is the question:
Carlton co has a financial year ended 30th June. The company is preparing accoounts for the year ended 30 june 2011. Carlton Co’s Landlord charged rent for the year 1 April 2010 -31 March 2011 of £1800, but has increased the rent to £2520 for the following year tp 31 March 2012.
The Charge to Carlton Co’s Statement of Profit and Loss for rent for the year ended 30 June 2011 should be:
The answer is not 1,700. Either you have mistyped the question or there is a mistake in your book.
From 1 July 2010 to 31 March 2011 is 9 months and so the expense is 9/12 x 1,800 = 1,350.
From 1 April 2011 to 30 June 2011 is 3 months and so the expense is 3/12 x 2,520 = 630.
Therefore the total expense is 1,350 + 630 = 1,980
In future you must ask in the Ask the Tutor Forum if you want me to answer.
Thank you so much for your explanation and apologies I will ask in the correct forum moving forward.
Thanks
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