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John Moffat.
John Moffat.-
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accachandrakant
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At 30 September 20X8, the following require items inclusion in MCD Co’s financial
statements:
(1) On 1 September 20X8, MCD Co received $5,000 as a deposit for goods which were
despatched to the customer on 15 October 20X8.
(2) On 1 August 20X8, MCD Co paid an insurance premium of $5,000 for the six month
period commencing 1 July 20X8.
(3) On 1 April 20X8, MCD Co raised a five?year bank loan of $12,000 which is repayable in
a single capitalsum at the end of the loan term. Interest is payable on the loan annually
in arrears at 5% per annum.
For these items, what wasthe effect of these transactionstotal figuresincluded in the MCD
Co’s statement of financial position at 30 September 20X8?
A Current assets $17,000 Current liabilities $2,800
B Current assets $19,500 Current liabilities $10,300
C Current assets $14,500 Current liabilities $5,300
D Current assets $7,500 Current liabilities $5,300
Please explain sir
John Moffat
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Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations 🙂
(1) Is a current liability of $5,000 because the customer has paid a deposit for goods that have not yet been delivered.
(2) is a current asset of $2,500 because there is a prepayment of 3/6 x $5,000.
(3) The loan itself is a non-current liability. However the is a current asset of the $12,000 cash received, and a current liability of the interest owing of 6/12 x 5% x $12,000.
Have you watched my free lectures? They are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
AbrahamChinYuan
- Topics: 12
- Replies: 14
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Sir,
3) the answer given posted the 12k usd loan under current asset.
May I know why the 12k usd loan is posted under the current asset and not under liability? Sorry if you have covered in your lectures but i could not recall.John Moffat
- Topics: 57
- Replies: 49583
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This is exactly what I explained in my previous reply!!!
The loan is a non-current liability (and so is not a current liability).
The cash they have borrowed is a current asset.
accachandrakant
John Moffat
AbrahamChinYuan
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