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- November 14, 2018 at 8:53 am #484769
2. At 31 December 20X5 the following require inclusion in a company’s financial statements.
i) 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
ii) The company paid an annual insurance premium of $9,000 in 20X5, covering the year ending 31 August 20X6
iii) In January 20X6 the company received rent from a tenant of $4,000 covering the six months to 31 December 20X5For these items, what total figures should be included in the company’s statement of financial position at 31 December 20X5?
A. Current assets: $10,000 Current liabilities: $12,240
B. Current assets: $22,240 Current liabilities: $nil
C. Current assets: $1,240 Current liabilities: $nil
D. Current assets: $16,240 Current liabilities: $6,000hi, the answer for this question is B.
But i got C
Here my workingi) Dr Receivable 12,000
Cr Bank 12,000Dr Accrued Revenue 240
Cr Interest Income 240ii) Dr Insurance 9,000
Cr Bank 9,000Dr Prepayment 6,000
Cr Insurance 6,000iii) DR Accrued Revenue 4,000
Cr Income 4000So the current asset should be
12,000 – 12,000+240-9,000+6,000+4000 =1,240
but why the answer is B and it doest included bank figure?
thanks π
November 14, 2018 at 9:24 pm #484860Owing to the company at 31/12/20×5 is
12,000 (loan principal) + 240 (interest) + 9,000 x 8/12 (insurance prepaid) + 4,000 (rent) = 22,240.
February 1, 2022 at 3:48 pm #647895Why caSh not deducted sir?
February 2, 2022 at 7:06 am #647919What cash? If you mean the 12000 loan paid out 1 January, you have no idea what cash balance is there at 31/12.
August 22, 2022 at 6:12 pm #663970Hi, I am confused. Can someone explain to me why it is not $9000 * 4/12 (Sep – Dec 20×5) = $3000 since it was paid covering the year ended 31 Aug 2006?
August 24, 2022 at 4:00 pm #664154We want the proper costs for the year to 31/12/X5 (P & L Ac) and the amount prepaid at 31/12/X5 (for the SOFP)
9000 paid X5 for the year to 31/8/X6:
P&L: Sept, Oct, Nov, Dec = 4/12 x 9000 = 3000
SOFP: The other eight months’ worth is a prepayment, so 8/12 of 9,000 = 6000 is an asset at year end.June 18, 2023 at 4:15 am #687193We paid 12,000 annual rent from oct 2016 to September 2017. The prepaid rent as at year end
2016 is ?
a. 9,000
b. 3,000
c. 12,000
d. 6,000June 20, 2023 at 4:38 pm #687280Of the rent payment of 12,000 for Oct 2016 until September 2017, three months’ worth must relate to Oct, Nov and Dec 2016. As at 31/12 2016, the other nine months’ worth relates to the next year ie year ended 31/12/2017 and is a prepayment as at 31/12/2016.
The prepayment is therefore 12,000 x 9/12 = 9000.
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