A business compiling its financial statements for the year to 31 July each year pays rent quarterly in advance on 1 January, 1 April, 1 July and 1 October each year. The annual rent was increased from $15,000 per year to $18,000 per year as from 1 October 20X5.
What figure should appear for rent expense in the business’s statement of profit or loss and other comprehensive income for the year ended 31 July 20X6?
Answer
| $ | |
| August to September 15,000 x 2/12 | 2,500 |
| October to July 18,000 x 10/12 | 15,000 |
| Rental Expense | 17,500 |