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A business sublets part of its office accommodation.
The rent is received quarterly in advance on 1 Jan, 1 Apr, 1 July and 1 Oct. The annual rent has been $24,000 for some years, but it was increased to $30,000 from 1 July 20×5.
What amounts for this rent should appear in the company’s financial statements for the year ended 31 January 20×6?
SOPLOCI SOFP
A 27,500 5000 in sundry receivables
B 27,000 2,500 in sundry receivables
C 27,000 2,500 in sundry payables
D 27,500 5,000 in sundry payablesi have calculated 27,500 for the SOPLOCI and 5000 for the SOFP but my kit has D as the answer and i choose A.
Why is this ??
This is rent being received (not rent being paid).
So the rent of 5,000 received in advance is not a receivable (it is not owed to us) it is a payable because the person renting from us has overpaid as at the year end.
So sir, that 5000 is payable means we owe the customer and we Cr aundry payable in SOFP, is it right? How do we deal with this payable in the next year?
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