Accounting Question

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sidfnisn
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Hey everyone, I have a question that needs answering ASAP.

If you can help thank you.

On 1 May 20X8 Portal pays a rent bill of £1,800 for the 18 months ended 30 June 20X9. What expense should be taken to the Income Statement and what is the entry on the Statement of Financial Position for rent in respect of the year ended 31 March 20X9?

£1200 with prepayment of £300
£1200 with an accrual of £600
£1500 with an accrual of £300
Last edited by sidfnisn; 1 month ago
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MindMax2000
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(Original post by sidfnisn)
Hey everyone, I have a question that needs answering ASAP.

If you can help thank you.

On 1 May 20X8 Portal pays a rent bill of £1,800 for the 18 months ended 30 June 20X9. What expense should be taken to the Income Statement and what is the entry on the Statement of Financial Position for rent in respect of the year ended 31 March 20X9?

£1200 with prepayment of £300
£1200 with an accrual of £600
£1500 with an accrual of £300
Pointers:

  1. This thread is in the wrong section
  2. This is an old question
  3. This question is grammatically confusing i.e. On 1 May 20X8, Portal pays (or is it paid?)...
  4. I have yet seen a firm that prepays rent in practice
  5. There are very few places where you can get rent at £100 per month - cheaper than renting a room


If Portal paid rent for 18 months in May 20X8, it will make sense the rest of the amount after 31 March 20X9 will be a prepayment
Accruals, in this sense, are payments you owe to someone, and you usually put it down as a liability.
You would also put down what the firm incurred (or should be allocated) in the Income statement during the financial year; anything outside of the financial year can be at best put onto the statement of financial position/Balance Sheet. i.e. if rent allocated during the financial year works out to be £100 a month, then you should put down £1200 for the year.
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