Joanna has prepared her draft accounts for the year ended 30 April 2008, and needs to adjust them for the following items: 1 Rent of $10,500 was paid and recorded on 2 January 2007 for the period 1 January to 31 December 2007. The landlord has advised that the annual rent for 2008 will be $12,000 although it has not been invoiced or paid yet. 2 Property and contents insurance is paid annually on 1 March. Joanna paid and recorded $6,000 on 1 March 2008 for the year from 1 March 2008 to 28 February 2009. What should the net effect on profit be in the draft accounts for the year ended 30 April 2008 of adjusting for the above items?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Joanna has prepared her draft accounts for the year ended 30 April 2008, and needs to adjust them for

the following items:

1 Rent of $10,500 was paid and recorded on 2 January 2007 for the period 1 January to 31

December 2007. The landlord has advised that the annual rent for 2008 will be $12,000

although it has not been invoiced or paid yet.

2 Property and contents insurance is paid annually on 1 March. Joanna paid and recorded $6,000

on 1 March 2008 for the year from 1 March 2008 to 28 February 2009.

What should the net effect on profit be in the draft accounts for the year ended 30 April 2008 of

adjusting for the above items?

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