Fill This Form To Receive Instant Help

Help in Homework
trustpilot ratings
google ratings


Homework answers / question archive / Katy started trading on 1 January 2020

Katy started trading on 1 January 2020

Accounting

Katy started trading on 1 January 2020. Her first set of accounts will cover the year to December 2020. She immediately entered into an 18-month lease for rent and had to pay the whole amount of £45,000 on 1 January 2020. She also entered into an agreement with an advertising agency who will provide her with promotional materials for a cost of £8,800 per year. This amount is to be paid in arrears in two equal instalments on 1 July 2020 and 1 January 2021.

Required:

Prepare ledger accounts for rent and advertising for the year ending 31 December 2020 clearly showing the income statement charges for these expenses.

pur-new-sol

Purchase A New Answer

Custom new solution created by our subject matter experts

GET A QUOTE

Answer Preview

Solution :-

DEBIT AMOUNT £ CREDIT AMOUNT £
Prepaid Rent Account    
1-Jan-20 45000 31-Dec-20 30000
    Closing Balance 15000
       
Rent Expense Account    
31-Dec-20 30000 Income Summary 30000
       
Advertising Expense Account    
1-Jul-20 4400 Income Summary 800
31-Dec-20 4400    
Total 8800 Total 8800
       
Accrued expenses- Advertising Account  
    31-Dec-20 4400