absorption costing and bookkeeping

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

Comments

  • Esme
    Esme Registered Posts: 711
    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.
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