9 marksAmla is a trader. Her financial year ends on 31 December.
Amla maintains one combined account for rates and insurance.
On 1 January 2016 three months’ rates, $480, was outstanding and four months’ insurance, totalling $700, was prepaid.
During the year ended 31 December 2016 the following payments were made by cheque.
$ | |
Rates 16 months to 31 January 2017 | 2560 |
Insurance 12 months to 30 April 2017 | 2400 |
REQUIRED
Prepare the rates and insurance account in the ledger of Amla for the year ended 31 December 2016. Balance the account and bring down the balances on 1 January 2017.
Amla
Rates and insurance account
Date | Details | $ | Date | Details | $ |
Identify the section of the statement of financial position at 31 December 2016 in which the balance on the rates and insurance account would appear.
Give a reason for your answer.
Section of statement of financial position:
Reason:
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