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Hi Sir.
I’ve been doing this since but I still can understand.1-A company receives rent from a large number of properties. The total received in the year ended 30 April 2008 was $1,154,880.
The following were the amounts of rent in advance and in arrears at 30 April 2007 and 2008:
30 April 2007 April 2008
Rent received in advance $ 68,880 $ 74,880
Rent in arrears (all subsequently received) $50,880 $ 44,160What amount of rental income should appear in the company’s Statement of Profit or Loss for the year ended 30 April 2008?
A $1,167,600
B $1,106,160
C $1,203,600
D $1,142,160The cash received was 1154880.
However at the start of the year there was rent received in advance of 68880 – this had been received last year, but is this years income, so it needs adding on to the cash received this year.
Also, at the start of the year there was rent in arrears of 50,880 – this was last years income but was owing and so is part of the cash received this year. So it needs subtracting from the cash received this year.At the end of the year we had received rent in advance of 74880 – this is part of the cash that was received this year, but is not this years income. So it needs to be subtracted from the cash received this year.
Finally, at the end of this year there was rent in arrears of 44160 – this is this years income but we have not yet received the cash. So this needs adding on to the cash received this year.
Hope that helps 🙂
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