FRA -Prepayment

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pink
pink Registered Posts: 35 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Hi

Can anyone please help me with this question??

On 11th November 2003 the partnership paid rates of £2484 for the twelve months ending 30th April 2004.

The year end is March 2004

What would the prepayment is March be? is it £207?

I really cant get my head around this one, my mind gets on going blank :-(

Thanks

Comments

  • monty247
    monty247 Registered Posts: 15 New contributor 🐸
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    Hi,

    Yes the answer is £207. I sat the FRA exam in June '09.

    Good Luck
  • abbiew
    abbiew Registered Posts: 10 New contributor 🐸
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    Hi, i got £207 too.

    The way i got it was the rates were paid at £2484 for the 12 month period which ended the end of April. I divided this by the twelve to get the £207 which is the equivalent to a months charge. As April is one month after march then the prepayment is for the month of April, i.e. one month at £207.

    Hope that helped?!
  • pink
    pink Registered Posts: 35 Regular contributor ⭐
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    Hi

    Thanks for replyign to me!! I thought it would be - its just i always get confused at the way they ask the question but then I guess they try to trick you!!

    I also thought, that if you already made the payment in November, at that point you would have put the whole cost to prepayments so then in March you would actually release the prepayment, therefore the double being entry DR Rates CR prepayment?
  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    Always debit prepayments (remember prepayments goes with debtors on the balance sheet and debtors are always a debit...)
    Accurals are always a credit.

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