Prepayment Question

sscors

Hey if anyone understands this question please help

The rent of a business is £3000 per quarter payable in advance. During 20X0 the rent ledger account shows that £15000 of rent has been paid during the year.

What is the correct charge to the profit and loss account for the year and what is the amount of any prepayment at 31 Dec 20X0?


My Soln

1st Quarter

Jan-April £3000

2nd Quarter

May- August £3000

3rd Quarter

September- Dec £3000

Total actual rent used that period £9000

Prepayment 15000-9000= 6000

Actual soln:


P&L is 12000 for the year prepayment is 3000

PGM

I'm confused, your quarters seem to be thirds?

If its payable in advance then you only need to prepay any amounds paid before the end of Dec10 for any of the period from Jan11.

sscors

Thanks

Yeah your right I've not divided the year into quarters