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What amount should appear in the income statement

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Reference no: EM132623269

Question - Accrual accounting

Question 1: Locke Ltd

a. Locke Ltd has a year-end of December 31st. On August 31st, 2013, it paid (in cash) $27,000 of rent for the six months ending on February 28th, 2014. What amount should appear in the 2013 income statement? What amount should appear on the closing balance sheet for 2013? Record these transactions in a transaction worksheet.

b. Now suppose that the next two semi-annual rent payments are:

February 28th, 2014 $30,000

August 31st, 2014 $36,000

What amount should appear in the 2014 income statement? What amount should appear on the closing balance sheet for 2014? Record these transactions in a transaction worksheet.

Question 2: Descartes Ltd

On December 31st, 2013, Descartes Ltd (which has a December 31st year-end) received and paid a telephone bill of $24,000 comprising:

Calls for the three months ended on December 31st, 2013 $18,000

Rental for the six months ending on March 31st, 2014 $6,000

What amounts should appear in the 2013 income statement and on the closing 2013 balance sheet in respect of this bill? Record these transactions in a transaction worksheet.

Reference no: EM132623269

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