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Hi, can I get some help with the above question.
I think I’m getting confused with the months. Where would it be best to start in regards to months.
For the above I’ve just started with the information provided i.e
1 Jan to March 50400
1 April to June 2/3 x 57600 = 38400 prepay and 1/3 x 57600 = 19200 exp
1 Oct to dec 57600
1 Jan to March 57600I’m getting the prepay 38400 in my answer but not the the expense figure of 225600 for expense.
Any help or suggestion where to start to tackle the question would be appreciated.
AJ
Our year is 1 May 2008 to 30 April 2009.
From 1 May 2008 to 30 June 2008 (2 months) the rent is 201600 per year, so for those 2 months it is 2/12 x 201600 = 33600
From 1 July 2008 to 30 April 2009 (10 months) the rent is 230400 per year, so for those 10 months it is 10/12 x 230400 = 192000
So total rent is 192000 + 33600 = 225600
Thanks for your swift reply.
In general, questions talking about arrears and advance payments does arrears mean accruals and advance payments prepays? Or do we just take it as the literal meaning of arrears paying late and advance payment paying before due?
Just really struggling with the chapter.
AJ
Take the literal meaning 🙂
Paying in arrears will usually mean that an accrual will be needed. Paying in advance will usually mean that a prepayment will be needed.
(But not always, for example you might have paid in advance but the payment covered the period exactly up to the end of the year.)thanks ACCA Tutor we found the total rents expense what will be Prepayment at the end of 30 april 2009
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