00:02
Hello students, in this question, we have to prepare balance sheet and income statement.
00:07
So, here the total bill paid on december 1st is, bill paid is given to us 14 ,000 and bill consists of two parts, which is called for three months, it is 8 ,000 and line for rental for six month is 6 ,000, line for six month, it is 6 ,000.
00:37
So, the amount related to the calls for three months ended on december 21st should be recorded as an expense.
00:43
This amount will be recorded as an expense in income statement.
00:48
The amount related to line rental for six month on recorded as prepaid expense.
00:53
This one will be recorded as prepaid expense on closing balance sheet.
00:59
It is on balance sheet, it is an income statement.
01:02
So, this is prepaid expense because it is a future expense...
