Katy started trading on 1 January 2020. Her first set of accounts will cover the year to December 2020. She immediately entered into an 18-month lease for rent and had to pay the whole amount of £45,000 on 1 January 2020. She also entered into an agreement with an advertising agency who will provide her with promotional materials for a cost of £8,800 per year. This amount is to be paid in arrears in two equal instalments on 1 July 2020 and 1 January 2021.

Required:

Prepare ledger accounts for rent and advertising for the year ending 31 December 2020 clearly showing the income statement charges for these expenses.

Answer rating: 100% (QA)

Solution DEBIT Prepaid Rent Account 1Jan20 Rent Expense Accou... View the full answer