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Greetings sir,
I hope you are doing well.
For Q 21.3, I understood the answer for Receivables and Prepayments. But not Payables and Accruals.
Payables I get would be zero.
But my contention is Accruals.
I thought for (1) there should be an accrual c/f of $160 (240/12 x 8) within the Loan Income T Account 2012 for the $240 Interest that is received on the 30th April 2013.
And for (3) under Rent Income 2012, an accrual of $4,000 c/f , which is received in Jan 2013.
As for Q 21.9, I thought it is D, because C cant be correct as only if the non adjusting events are material, they should be disclosed in the notes.
21.3
For 1, as at 31 December 20X2 no interest had been received. Therefore there is accrued interest for 1 years interest which is 2% x $12,000 = $240. (in addition to the $12,000 owing to the company by the employee).
For 3, Yes, there is accrued income of $4,000.
21.3
For 1, as at 31 December 20X2 no interest had been received. Therefore there is accrued interest for 1 years interest which is 2% x $12,000 = $240. (in addition to the $12,000 owing to the company by the employee).
For 3, Yes, there is accrued income of $4,000.
Shouldn’t there be accrued interest of 8 months (160) , because the rest of the months are in 2013. Year end is 31 Dec 2012.
And if you agree there is accrual be it of any amount ($4000 + 160/240) , then why the answer which is (B) shows NIL for Payables and Accruals.
Also, you forgot to reply for Q21.9.
21.3
As at 31 December X2, the interest earned is the interest earned for the 12 months since the loan was given on 1 January X2. This is what is owing as at 31 December and is therefore the amount of the accrued income.
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