Rent expense​ for changing price ( video below)

A business compiling its financial statements for the year to 31 July each year pays rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The annual rent was increased from $15,000 per year to $18,000 per year as from 1 October 20X5.

What figure should appear for rent expense in the business’s statement of profit or loss and other comprehensive income for the year ended 31 July 20X6?

Answer

$

August to September 15,000 x 2/12      2,500

October to July 18,000 x 10/12             15,000

Rental Expense                                       17,500

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