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At 31 December 20×5 the following require inclusion in a company’s financial statements:
1-on 1 January 20×5 the company made a loan of $12,000 to an employee, repayable on 1 January 20×6, 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 20×6 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?
A- Current assets $10,000 Current liabilities $12,240
B- Current assets $22,240 Current liabilities $nil
C- Current assets $10,240 Current liabilities $nil
D- Current assets $16,240 Current liabilities $6,000The answer is B.
explain the answer please,
Thank you.The loan is a receivable – a current asset. 12,000
One years interest on the loan is due – a current asset. 2% x 12,000 = 240
There is a prepayment of insurance for 8 months – a current asset. 8/12 x 9,000 = 6,000
There is accrued rental income – a current asset. 4,000
Total = 22,240.
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