compak 2010 mistake ???

[Albeno69]

i just completed compak 2010 and question 1.3.4 i think has an error?
how come they have debited prepaid rent revenue?

[sam.utute]

I don't think it is an error. THe business received $850 per month as rent revenue in advance for May, June and July. This would have been recorded as prepaid rent revenue by the business (850x3=2550). At June 30, 2 months rent revenue has been earned, so an adjustment is necessary to record the revenue. Prepaid rent revenue was recorded as a liability (the business has an obligation to the renter (don't know the name lol)) and it needs to be debited to reduce the liability.

Adjustment:
DR. Prepaid Rent Revenue
         CR. Rent Revenue

Sam

[Albeno69]

our teacher told us that we always debit the revenue similar to unit 3 were it was credit the expense.lol

[mmmmm]

Are all the source documents wrong in the answers? And solution is missing Q1.1.4?

Also, how do you work out 300% mark up?  I never know how to do them.

[mmmmm]

Ps.  For Q2.1.2. Why didn't they put separate the amount for GST and sundries? :S

[eeps]

Also, how do you work out 300% mark up?  I never know how to do them.

Assuming you're talking about the Cost of Sales in the Stock Control account, you + 1 to the mark-up (i.e. if it's 300% mark-up = 3+1 = 4). So it is; $385,000 (Total Sales)/4 (3+1) which gives you $96,250 which is the right solution.

[mmmmm]

Also, how do you work out 300% mark up?  I never know how to do them.

Assuming you're talking about the Cost of Sales in the Stock Control account, you + 1 to the mark-up (i.e. if it's 300% mark-up = 3+1 = 4). So it is; $385,000 (Total Sales)/4 (3+1) which gives you $96,250 which is the right solution.

Oh yup, i get it now. Thanks so much!!

[mmmmm]

Sorry, just another question.  In 2.1.2, where did they get the figure '41 503'?

[_avO]

Because of credit terms 2/14, they got a 2% discount

[lilaznkev1n]

Sorry, just another question.  In 2.1.2, where did they get the figure '41 503'?

Due to the credit terms on the purchase of the new vehicle being 2/14 n/30, and the business paid within 12 days so the business will receive a discount of $847.
Therefore in the cash reciepts journal under bank it would be $41503 ($42350-$847), Discount revenue would be $847 and Sundries would be $42350.

Hope this helps

[lilaznkev1n]

Because of credit terms 2/14, they got a 2% discount

haha you replied while i was typing my answer

[mmmmm]

Oh right! I'm an idiot. I didn't even look at the figure at the discount revenue column! So, i guess discount revenue applies to sundry creditor AND normal creditors.  But why didn't they separate the GST clearing....

Thanks

[lilaznkev1n]

Oh right! I'm an idiot. I didn't even look at the figure at the discount revenue column! So, i guess discount revenue applies to sundry creditor AND normal creditors.  But why didn't they separate the GST clearing....

Thanks

GST wasn't seperated in the crj as in the previous question (2.1.1), GST was already recorded:

Feb1         Motor Vehicle                             38500DR
               GST Clearing                               3850DR
                    Sundry Creditor-Jones Motors                    42350CR

[_avO]

GST isn't separated because the business is not obligated to pay GST to the ATO, but rather the Sundry Creditor (Jones Motors) is liable to pay that 3850 GST. Further, when a discount is offered it does not deduct any proportion of GST.

[mmmmm]

OH yup yup. So it's been incurred already (when it's been recorded in the general journal).  Recording it again in the CRJ would be recording it twice, right?