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A business compiling its financial statements for the year to 31 July, each year pays rent quarterly in advance on 1 Jan., 1 Apr. , 1 Jul. & 1 Oct. each year. The annual rent was increased from $ 60,000 per year to $ 72,000 per year as from 1/10/2003.
What figure should appear for rent expense in business’s statement of profit or loss and other comprehensive income for the year 31/7/2004?
A. $ 69,000
B. $ 62,000
C. $ 70,000
D. $ 63,000It should be C $ 70,000
$5000 each for August and September 2003 and then $6000 for the next 10 months till July 200460,000 a year is 5,000 a month (60,000/12)
72,000 a year is 6,000 a month (72,000/12)HaZe has shown the rest of the calculations – (2 x 5,000) + (10 x 6,000)
Theta prepares its financial statements for the year to 30 April each year. The company pays for its rent for its premises quarterly in advance on 1 Jan, 1 Apr, 1 Jul & 1 Oct. each year.The annual rent was $84,000 per year until 30 June 2011. It was increased from that date to $ 96,000 per year.
What rent expense & end of year prepayment should be included in the financial statements for the year ended 30 April 2012?
A. Expense: $ 94000, Prepayment: $ 8000
B. Expense: $ 94000, Prepayment: $ 16000
C. Expense: $ 93000, Prepayment: $8000
D. Expense: $ 93000, Prepayment: $ 8000I am guessing you are still not comfortable with the concepts of this kind of questions. So i will say to go over the lectures and notes and get the concept and then you will see these kind of questions will seem straightforward.
Now to the answer of the question you asked, The answer is B
For the first 2 months which are May and June 2011,he paid $7000 each totalling $14000
and for the rest of the 10 months the rent was $8000 each month totalling $80000
In total 140000+80000 = $94000Since he pays quarterly in advance so he must have paid for 3 months in April 2012 of which only april should be counted in this year expense since the year end of financial statement is 30 April. The other two months (may and june) are prepaid.($8000 each month so $16000 in total)
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