FA – L1 – Q40 – Accruals and prepayments

Prepare rent receivable and interest payable ledger accounts for James for 20X9 based on given rental and interest data.

Question

James owns various properties which he rents out under short-term lets; some tenants pay in advance, some in arrears. Similarly with his various borrowings the interest is paid in arrears and in advance.
During 20X9 rent collected was GH₵229,500 and interest charged to the statement of profit or loss was GH₵52,500.
Rents receivable and paid in advance together with amounts of interest prepaid and payable at the statement of financial position dates were as follows.

	31 December
	20X8	20X9
	GH₵	GH₵
Rents owed by tenants	34,200	40,500
Rents prepaid by tenants	20,700	15,300
Prepaid interest	3,500	5,600
Interest payable	9,800	7,000

Required
Write up the rent receivable account and the interest payable account for the year ended 31 December 20X9.

Answer

Rent receivable

20X9		GH₵			GH₵
1 Jan	Accrued income reversal	34,200	1 Jan	Deferred income reversal	20,700
	Statement of profit or loss (calculated as a balancing figure)	241,200		Cash	229,500
31 Dec	Accrued income	40,500	31 Dec	Deferred income	15,300
	Total	315,900		Total	315,900

Interest payable

20X9		GH₵			GH₵
1 Jan	Prepaid interest reversal	3,500	1 Jan	Interest payable reversal	9,800
	Cash/Bank	48,900		Statement of profit or loss	52,500
31 Dec	Interest payable	7,000	31 Dec	Prepaid interest	5,600
	Total	65,900		Total	65,900

Tags: Accruals, Financial Statements, Interest Payable, Ledger accounts, Prepayments, Rent Receivable
Level: Level 1

Topic: Accruals and prepayments

Uploader: Samuel Duah