help in accounts p1 as

[mohsinsrk]

A company’s financial year ends on 31 December.
At 31 December Year 1 the company carried forward a debit balance of $36 200 on the Rent
account.
During Year 2 payments made for 12 months’ rent, to 31 March Year 3, were $157 200.
What is the amount of rent to be charged against profit in the year ended 31 December Year 2?
A $121 000 B $154 100 C $160 200 D $193 400

ANSWER IS B BUT WHY...EXPLAIN???

 

[Dani315]

Actually,,, it was quite SIMPLE!!! Make a 'T' account of Rent for convenience.... Balance b/d would b,,, on Debit (as stated) of $36,200 . Next,, The amount paid in year was $157200 ( as stated) ,,, which will cm on Debit side again, of the T account. Next,, The balance carried forward will b $39,300 , which will b posted to the credit side of T account, as the amount was paid in advance for THREE MONTHS... Now,, how u got,, 39,300???? Solution to this is,,, that it paid 157200 for 12 mnths till March'Y3,,,, So,, (157200/12)x3 ..... The balancing figure in T account would b the amount to b charged against profit for the year (in Expenses section). Hope this would clear yr doubts & b helpfull!!!!