Been revising all afternoon, going over some questions in Ian Harrison's Accounting book. I think I have gone pudding brained now on this question,most of it I have done except this transaction.
A rent payment of £572 has been credited to the rent payable account of £752.
I think I have read this different to Pauline and took a different view on this (the same view as you infact!);
You said it was a rent payment, so assuming the bank had been credited with the correct value of £572, you would have a DR balance on the suspense account of £1324 (£572 Credited to bank + £752 Credited to Rent ac).
Therefore you would need to CR Suspense £1324 to zero this account, then DR Rent Payable £1324 (£572 + £752) to get your Rent ac DR balance of £572. Which is the way you have mentioned, only broken down, therefore I believe you are correct!
(EDIT) If it is in fact rent income (receipt) then Pauline has covered that :)
Kind regards
Kerry
-- Edited by KerryB on Wednesday 22nd of February 2012 06:33:18 PM
Is this rent payable as in an expense, or rent payable as in rental income? If it's rental income the credit to the rent payable account is correct (apart from the figure obviously).
If it's rent income then you will have debit bank £572 and credit rent account £752 and would have had to make an entry in the suspense account of debit £180 otherwise the TB wouldn't have balanced.
To correct this you would credit suspense account £180 and debit rent account £180. The rent account would then balance off at £752-£180 which is £572.
Its one of those questions, that I asked myself if it was rent payable as an expense or rent payable as in income when it said £572 has been credited to the rent payable account , but I questioned myself thinking if it was rent payable as an expense then the credit entry needed changing. It does not say anything about bank entry's so I am assuming this entry was correct. Thanks for you replies back to revising for my exam. Kind Regards Sue
