Question 1

a.Locke Ltd has a year-end of December 31^st. On August 31^st, 2013, it paid (in cash) $27,000 of rent for the six months ending on February 28^th, 2014.What amount should appear in the 2013 income statement? What amount should appear on the closing balance sheet for 2013? Record these transactions in a transaction worksheet.

b.Now suppose that the next two semi-annual rent payments are:

February 28^th, 2014$30,000

August 31^st, 2014$36,000

What amount should appear in the 2014 income statement? What amount should appear on the closing balance sheet for 2014? Record these transactions in a transaction worksheet.

EXPLAIN

Question 2: Descartes Ltd

On December 31^st, 2013, Descartes Ltd (which has a December 31^st year-end) received and paid a telephone bill of $24,000 comprising:

Calls for the three months ended on December 31^st, 2013$18,000

Rental for the six months ending on March 31^st, 2014$6,000

What amounts should appear in the 2013 income statement and on the closing 2013 balance sheet in respect of this bill? Record these transactions in a transaction worksheet.

EXPLAIN