Interest receivable

edddd1
edddd1 Registered Posts: 5 New contributor 🐸
in AAT Level 3 (Level 6 in Scotland)
If partners put £30,000 in a bank deposit account on 1st jan and interest of 4 percent will be paid 31 Dec, but the partnership tax year ends 30 September (ie 9 months out of 12), how would you show that in a journal? We've done prepayments and accruals, but this seems to be an accrued revenue issue.

We definitely think 9 months of the £1200 is to be shown as asset (900), and obviously also a credit entry.

We're stuck. Please help!:001_rolleyes:

Comments

  • twinmeister
    twinmeister Registered Posts: 122 Dedicated contributor 🦉
    confused

    Not sure I understand why the accounting period runs 01/01 - 31/12, but the 'partnership tax year' ends 30/09? Is this Technician or Intermediate level?

    Don't you put in full 1200 then deduct prepayment 300 as an asset, rather than as an accrual?

    An accrual would give a current liability surely?

    Mmmm, not sure I've helped there?

    Maybe someone with a bigger brain could help you?
  • twinmeister
    twinmeister Registered Posts: 122 Dedicated contributor 🦉
    second thought

    I haven't seen partnership tax in my FRA books. Appropriation account to include : Interest on capital, drawings, salaries, goods for personal use and profit shares, but nowt else.

    Have a missed a section out?

    PANICCCCCCCCCCC!!!!!!!
  • Brent.U
    Brent.U Registered Posts: 11 New contributor 🐸
    Confused too!

    It's a bit late in the day for this!!!

    I've gone through all the past FRA papers and haven't seen anything like this come up.

    It's dealing with income which has not yet been received. I know about provision for doubtful debts but not provisions for future income.

    Are you talking aout FRA or ECR? Or something from Technician??

    Where did this question come from?

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