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At 31 December 20X5 the following require inclusion in a company’s financial statements.
1). On 1 January 20X5 the company made a loan of $12,000 to an employee, repayable on 1 January 20X6, charging interest at 2% per year. On the due date she repaid the loan and paid the whole of the interest due on the loan to that date.
2). The company paid an annual insurance premium of $9,000 in 20X5, covering the year ending 31 August 20X6.
3). In January 20X6 the company received rent from a tenant of $4,000 covering the six months to 31 December 20X5.
For these items, what total figures should be included in the company’s statement of financial position as at 31 December 20X5?
Current assets Current liabilities
A) $10,000 $12,240
B) $22,240 nil
C) $10,240 nil
D) $16,240 $6,000
Dear tutor correct answer is B. But to my mind it isn’t true answer bcoz paid cash (decreasing cash) isn’t included the calculations.The question asks what total figures should be shown for the items listed.
I does not ask about the cash balance (and we have no idea what the cash balance is anyway because lots of other transactions will have affected it).
At 30 September 20X8, the following require items inclusion in MCD Co’s financial statements:
On 1 September 20X8, MCD Co received S5,000 as a deposit for goods which were despatched to the customer on 15 October 20X8.
On 1 August 20X8, MCD Co paid an insurance premium of $5,000 for the six month period commencing 1 July 20X8.
On 1 April 20X8, MCD Co raised a five-year bank loan of $12,000 which is repayable in a single capital sum at the end of the loan term. Interest is payable on the loan annually in arrears at 5% per annum.
For these items, what was the effect of these transactions total figures included in the MCD Co’s statement of financial position at 30 September 20X8?
Current assets Current liability
A) $17,000 $2800
B)$19,500 $10300
C)$14,500 $5300
D)$7,500 $5300
As you see this is also similar question and cash is included the calculations and correct answer is C. What is difference between these two questions? Which one is correct?
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