How transactions should be accounted for in avery enterprise

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Reference no: EM133011587

A new accounting officer with Avery Enterprise has doubts on the recording of rental income and fire insurance premium. He approached you to get a better understanding of the matter. On 1 January 2021, Avery Enterprise received RM180,000 rental income in advance for the period of January to December 2021 from its tenant. The rental has been recorded in the cash book and credited to rental income account when received.On 1 July 2021, Avery Enterprise paid a sum of RM144,000 for an annual fire insurance coverage for the warehouse for the period from 1 July 2021 to 30 June 2022.Avery Enterprise closes its accounts on 30 September every year.

Required:

Problem (a) Prepare the relevant journal entries to show how the above transactions should be accounted for in Avery Enterprise's financial statements for the year ended 30 September 2021.

Problem (b) Prepare relevant extracts of the statement of profit or loss and the statement of financial positionshowing how the above rental income and insurance expense should be presented in the financial statements for the year ended 30 September 2021.

Reference no: EM133011587

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