Rental Income & Rent received in advance ( video below)

ABC company receives rent for subletting part of its office block.

Rent, receivable quarterly in advance, is received as follows:

Date of receipt   Period covered   $

1 October 20X3         3 months to 31 December 20X3    15,000

30 December 20X3   3 months to 31 March 20X4           15,000

4 April 20X4                3 months to 30 June 20X4             18,000

1 July 20X4                  3 months to 30 September 20X4  18,000

1 October 20X4          3 months to 31 December 20X4    18,000

What figures, based on these receipts, should appear in the company’s financial statements for the year ended 30 November 20X4 ?

Answer

$

Receipt

1 October 20X3 (15,000 x 1/3)            5,000

30 December 20X3                               15,000

4 April 20X4                                           18,000

1 July 20X4                                             18,000

1 October 20X4 (18,000 x 2/3)            12,000 (6,000 Credit rent in advance)

Credit to statement of profit or loss   68,000

Statement of profit or loss

$68,000 Credit

Statement of financial position

Rent received in advance (Cr) $6,000

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