Accruals and Prepayments

rathmaniacal · 26-11-2007 9:55pm #1

Another one for your collecitive wisdom:
First day of the year: Tenant one owes 1200, tenant 2 has prepaid 1680.
During the year: Tenant one pays 4800, tenant 2 pays 6000.
Final day of the year: Tenant 1 has paid 240 in advance; tenant 2 owes 600.
What figure goes into the Income statement?
Sometimes I get 11640, sometimes I get 10,680. What do you think?

charba · 26-11-2007 10:13pm

€11,640 as far as I can see.
For tenant one the accrual at the end of the year is due but it is in relation to the previous year so this must be taken away. Similar to this the prepayment at the end of the year must be taken away.
For tenant two the prepayment at the start of the year is in relation to the current trading period as is the accrual at the end of the year. So both of these must added on.

Hope this helps.