- 8 Marks
FA – Nov 2015 – L1 – SB – Q6c – Bases of Accounting: Accrual vs. Cash
Prepare the Rental Income Account to recognize rent in the profit or loss.
Question
D’favour owns several properties in Lagos that are let out to tenants. The summary of transactions at December 31, 2014, is given below:
| Item | N’000 |
|---|---|
| Accrued rent at December 31, 2013 | 440 |
| Prepaid rent at December 31, 2013 | 250 |
| Rent received during 2014 | 2,550 |
| Accrued rent at December 31, 2014 | 350 |
| Prepaid rent at December 31, 2014 | 480 |
| Uncollectable rent to be written-off | 35 |
| Agreement fee received | 50 |
Required:
Prepare the Rental Income Account to determine the amount of rent to be recognized in the Statement of Profit or Loss. (8 Marks)
Find Related Questions by Tags, levels, etc.
- Tags: Accrual Accounting, Prepaid Rent, Rental Income, Write-off
- Level: Level 1
- Topic: Bases of Accounting: Accrual vs. Cash
- Series: NOV 2015