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Leddly owns two properties , 1 and 2, Which it rents to it’s tenants. In year end 20×6. It received 280,000 from property 1 and 160,000 from property 2..balances on the prepaid and accrued income accounts were as follows:
Property 1- $13,400 Dr.(31 Dec, x6) $12,300 Cr (31dec, X5)
Property 2 – $6700 Cr. (31dec, x6) $5400(31 dec, x5)
Why amount should be credited to SOPL for the year ended 32 Dec, 20×6 in respect of rental income.
I tried in all way I given this question half hour which is crazy for 2 min question. I didn’t quite able to interpret the question. I followed the solution still it doesn’t helps.
My biggest doubt is – what are the balances in from of property 1 and 2 . It’s Accrued or prepayment and credits and debits are from rental account or Accrued and prepayment account.Please help
For property 1 they have received cash of $280,000. At the end of last year they had a credit balance and so they owed money to someone who had paid some of this years rent during last year. It is income for this year. At the end of this year that have a debit balance which means someone owes them some rent for this year. So that is income for this year also.
Therefore the total income is 280,000 + 12,300 + 13,400 = $305,700It is the same sort of logic for Property 2 🙂
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