- This topic has 1 reply, 2 voices, and was last updated 2 years ago by Ken Garrett.
- November 14, 2018 at 8:53 am #484769quratun
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 20X5
For 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: $6,000
hi, the answer for this question is B.
But i got C
Here my working
i) Dr Receivable 12,000
Cr Bank 12,000
Dr Accrued Revenue 240
Cr Interest Income 240
ii) Dr Insurance 9,000
Cr Bank 9,000
Dr Prepayment 6,000
Cr Insurance 6,000
iii) DR Accrued Revenue 4,000
Cr Income 4000
So 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 🙂November 14, 2018 at 9:24 pm #484860Ken GarrettKeymaster
Owing 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.
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