ACCA F3 Past Exam Prepayment
Theta prepares its financial statements for the year to 30 April each year. The company pays rent for its premises quarterly in advance on 1 January, 1 April, 1 July and 1 October each year.
The annual rent was $24,000 per year until 30 June 2005. It was increased from that date to $28,800 per year.
What rent expense and end of year prepayment should be included in the financial statements for the year ended 30 April 2006?
| Month | Rent | |
| 2 | 2,000 | 4,000 |
| 10 | 2,400 | 24,000 |
| Total rent (expenses) | 28,000 | |
| Total prepayment | 2 months'rental | 4,800 |