Question

17

A property company received cash for property rentals totalling $738,400 during the
year to 31 December 2009. Figures for rent received in advance and rent in arrears at
the beginning and end of the year were as follows.
31 December 2008
31 December 2009
Rent received in advance
125,300
77,700
Rent in arrears
(all subsequently paid, no bad debts)
39,600
41,100
What amount should appear in the company's income statement for the year ended 31
December 2009 for rental income?​

Answer 1

$764,400

Step-by-step explanation:

Payment in advanced are prepayment which are treated as current liability until the service is delivered and sales income are credited while the .prepayment account are debited.

Accrual payment are payment for service already delivered which are current liability (receivables)

Rental income received = $738,000

Rent in advance as at 31/12/2008 102,600

(prepayment for 2009)

Rent in advance as at 31/12/2009 (77,700)

Prepayment for 2010

Rent in arrears as at 31/12/2008 (39,600)

Accrued payment for 2008

Rent in arrears as at 31/12/2009 41,100

Recognized income 764,400