unsure questions on exam

[phanphy]

Aug 13th i think results

[andrew4443]

For total equities it was supposed to be both the capital and liabilities accounts?

[nbalakers24]

i had liabilities, i was unsure too

[phanphy]

Equities are claims on the assets of the firm..
consisting of both Liabilities and Owner's equity

So yeah, should have included Liabilities and Owner's Equity (inclusive of net profit, drawings)

[green04]

what questions this?

[phanphy]

1.5.2

[sdhains]

can someone explain to me why this would be wrong.
'rent is paid three months in advance. three payments of $4000 were made in January, March and June 2009'.
The general journal entry for prepaid expense on June 30th:
Rent DR 10667
Prepaid Rent CR         10667

my logic: considering prepaid rent is paid 3 months in advance starting in january. then the 3 months which rent is prepaid must be for  january, febuary and march, as rent is paid in advance again in March. Therefore wouldnt rent expense be 8000 + 4000/3 as on the 30th of june the rent expense would have been consumed for that month?

[andrew4443]

can someone explain to me why this would be wrong.
'rent is paid three months in advance. three payments of $4000 were made in January, March and June 2009'.
The general journal entry for prepaid expense on June 30th:
Rent DR 10667
Prepaid Rent CR         10667

my logic: considering prepaid rent is paid 3 months in advance starting in january. then the 3 months which rent is prepaid must be for  january, febuary and march, as rent is paid in advance again in March. Therefore wouldnt rent expense be 8000 + 4000/3 as on the 30th of june the rent expense would have been consumed for that month?

This is what I posted in another thread:
"I'm pretty sure it was $8000, because in January he paid rent for three months advance (for $4000) so he had rent from January,Feb and March, then in March he paid for April, May and June (for $4000) then in June he paid for the next three months starting from the 1 July

Therefore he has used up $8000 of prepaid rent , so you debit rent expense $8000 and credit Prepaid rent $8000"

[sophx]

was the trick question the one where you had to show how wages expense would be after adjusting /closing entries?
and all u had to do was put in the balance shown from the trial balance and close it to the p and l statement?

[nbalakers24]

i think i had

wages expense 61400
accrued wages 1800

[rlobo1]

did anyone notice that their was a structural flaw in question one? they said the reporting period was 1 year ending on june the 30th however they wanted us to post and balance the general ledger accounts on the 31st of may when this is only done at the end of the reporting period lol

[nbalakers24]

no i did not notice, i'll give u positive karma for that lol

[Nelle]

Dam I just realised that cash flow statements should have had a zero balance at the 1st of January as you entered $20000 into the cash reciepts already (capital contribution) and therefore, you are recording it twice..if you enter that as the bank balance at the start of the period.
Did anyone else make this mistake?

[nbalakers24]

yes, i think alot of people did.

[rlobo1]

Dam I just realised that cash flow statements should have had a zero balance at the 1st of January as you entered $20000 into the cash reciepts already (capital contribution) and therefore, you are recording it twice..if you enter that as the bank balance at the start of the period.
Did anyone else make this mistake?

nah, you are correct. the vce co-ordinator and the 3/4 accounting teacher at my school read through that question and said you would record the opening bank balance as $20,000. This is because the cross reference to capital contribution in the general ledger would be bank and you post commencing entries of a business on the day they occur. Thereofre the opening bank balance in the cash flow statement is 20,000