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Farthing year ended is 30 september. On 1 jan 2006 the organization took out a loan of $100,000 with annual interest of 12%. The interest is payable in equal installments on the first day of April, July, October, and jan in arrears..
Sir the options are
Sopl sofp
1. 12000 3000
2.9000 3000
2.9000 nil
4.6000 3000
Sir I am getting 9000 and nil
As 9 months till 30 September 20×6 will be 9000 and the last installment will be on 1 july for july august september which is the ending of the year. So how will it be accrual or prepayment??Because they are paying in arrears, the last payment will have been on 1 July and will have covered the 3 months from 1 April to 30 June.
Therefore at the end of September they will still be owing interest for the period from 1 July to 30 September, which means that they will need to accrue for 3/12 x 12% x $100,000 = $3,000.
The total expense in the SOPL is 12% x 100,000 = $12,000.
Active Co pays rent quarterly in arrears on 1 Jan, 1 April, 1 July, and 1 October each year. The rent was increased from $90,000 per year to $120,000 per year as from 1 October 20×2.
What rent expense and accrual should be included in Active Co’s financial statements for the year ended 31 Jan 20×3?
Answer:
Rent expense 100,000 Accrual 10,000Why we calculate on February to March 20×2 (22500×2/3) is 15000 why can’t we write just 22500?
We need the cost of the rent for the year, not the actual cash paid (as is the case for all expenses).
From 1 Feb to 30 Sep, the cost of the rent is 8/12 x 90,000 = 60,000.
From 1 Oct to 31 Jan, the cost is 4/12 x 120,000 = 40,000.Therefore the total cost for the year is $100,000.
There is no need to show Feb to Mar separately at all.
The year end of M Co is 30 November 20×0. The company pays for its gas by a standing order of $600 per month. On 1 December 20w9, the statement from the gas supplier showed that M co had overpaid by $200. M Co received gas bills for the four quarters commencing on 1 December 20w9 and ending on 30 November 20×0 for $1300, $1400, $2100 and $2000 respectively.
Which of the following is the correct charge for gas in M Inc’s statement or profit and loss for the year ended 30 November 20×0?
A. $6800
B. $7000
C. $7200
D. $7400
What would be the correct answer for this and how?
Also, $200 is prepaid expense but i could not get what actually is $600. Though we are only asked to find SOPL, what would be in the SOFP if we were to find?Please do not type out full questions and expect to be provided with a full answer. You must have an answer in the same book in which you found the question, so in future ask about whatever it is in the answer that you are not clear about and then I will explain.
We need the total expense for the period 1 December W9 to 30 November X0.
The total gas used during the year is the total of the 4 bills and is therefore $6800, and this is the expense in the SOPL.
They have been paying $600 per months, and to the total cash paid is 12 x $600 = $7,200. In addition they have overpaid $200. So at the end of the year they have overpaid a total of 7,200 + 200 – 6,800 = $600 and this will appear as a prepayment in the SOFP.
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159 Leddley owns two properties which it rents to tenants. In the year ended 31 December 20X6, it received $280,000 in respect of property 1 and $160,000 in respect of property 2. Balances on the prepaid and accrued income accounts were as follows:
31Dec20*6 31Dec 20*5
Property 1 13,400 Dr 12,300 Cr
Property 2 6,700 Cr 5400 DrWhat amount should be credited to the statement of profit or loss for the year ended 31 December 20X6 in respect of rental income?
Answer was:(ledger account)
Dr Rental income Cr
Balance b/f 5400 Balance b/f 12,300
SOPl 453,600 cash (1+2) 440000
Balance c/f 6700 Balnce c/f 13,400
465,700 465,700
Balance b/f 13400 Balance b/f 6700How does the $6700 come in Dr side of the account instead of Cr side?
How does the $13,400 come in Cr side of the account instead of Dr side?We need to end up with a credit balance brought forward of $6,700.
When closing off accounts we always carry forward the balances from the opposite side. so to end up with a credit of 6,700 we carry forward 6,700 from the debit side of the account. (The same in reverse for the debit balance).
For a full explanation of how we balance off accounts (i.e. closing off the accounts) do watch my free lectures working through chapter 3 of our free lecture notes.
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