absorption costing and bookkeeping

anthony_12c

hi, i understand the basis of absorption costing but my question is...

If rent is apportioned by floor space equally 50/50 between two units, one office and the other factory, and the total rent for the year was £20,000. What book keeping entry would you make?

would it be debit rent account £20,000 and credit cash account £20,000?

or would you debit rent account £10,000 and credit production overhead control account?

Any help would be much appreciated and a little explanation of why you do it the way it's done thanks

Esme

anthony_12c wrote: »

hi, i understand the basis of absorption costing but my question is...

If rent is apportioned by floor space equally 50/50 between two units, one office and the other factory, and the total rent for the year was £20,000. What book keeping entry would you make?

would it be debit rent account £20,000 and credit cash account £20,000?

or would you debit rent account £10,000 and credit production overhead control account?

Any help would be much appreciated and a little explanation of why you do it the way it's done thanks

I think you would debit rent ac 20,000 and credit bank 20,000

then debit the seperate overhead department accounts 10,000 and credit rent account.