Question

Ricardo Ram pays to rent car parking spaces outside his office. On occasions, he is able to sublet these. During the year to 30 April 2010, the following entries were recorded in his rental ledger account: - rent paid $5,853 by Ricardo; - an additional invoice received $150; for rental expense - month of May 2010 - cash of $822 received from subletting the parking spaces. What is the net balance for rent that should be included in Ricardo's Income statement at 30 April 2010? a. $5,031 b. $6,825 c. $4,181 d. $4,881

Answer 1

C. $5,181

Step-by-step explanation:

To determine the net balance for rent that should be included in Ricardo's Income statement at 30 April 2010, we need to calculate the total rental expense and the total subletting income,

Rent paid by Ricardo: $5,853

Additional invoice received for May 2010: $150

Total rental expense = $5,853 + $150 = $6,003

Total subletting income = Cash received from subletting the parking spaces = $822

Net balance for rent = Total rental expense - Total subletting income

Net balance for rent = $6,003 - $822 = $5,181

Therefore, the correct answer is c. $5,181.