Prepayment Question
sscors
Registered Posts: 71 Epic contributor 🐘
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
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
0
Comments
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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 Jan11.0 -
Thanks
Yeah your right I've not divided the year into quarters0
