2020 SMSS 3E POA EOY P2 Q3

2020 SMSS 3E POA EOY P2 Q3

3 Leonard runs a tuition centre. The financial year end of his business is 30 June. The following information has been provided.

Accounts balance at 1 July 2019

$

Advertising payable

183

Rent income received in advance

2 600

  

During the year ended 30 June 2020

 

Payments made for advertising

3 800

Rent received 

14 300

Additional information

1. Advertising expense, $583, had not been paid on 30 June 2020.

2. Included in the rent received was the sum of $1 300 in respect of rent due for July 2020.

REQUIRED

a. Calculate the amounts (showing all workings) to be included in the statement of financial performance of the business for the year ended 30 June 2020 for:

[8]

i. Advertising expense

ii. Rent income

b. Prepare an extract of the financial position of the business as at 30 June 2020.

[3]

c. State and explain the accounting theory applied when calculating the amount for advertising expense for the year ended 30 June 2020.

[2]

i. Monetary theory

ii. Accounting period theory

[TOTAL 13]

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