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Chapter 10

Q. 10.2

The following transactions were registered during the year 20X8:
• Subscriptions of journals paid in 20X8 of 7000 lei, of which paid in advance for January, 20X9 of 1000 lei;
• Subsidies received from the Government: 10,000 lei, of which 30% apply to the year 20X9;
• Rent received in 20X8 in the amount of 20,000 lei, of which rent of 2500 lei was received in advance for January, 20X9.

Provide the journal entries.

Step-by-Step

Verified Solution

The journal entries are the following:
a) The subscription paid in advance:


7000 lei       %                                                     = Account Payables          7000 lei        6000 lei       Expenses with subscriptions
1000 lei        Prepaid expenses


 

b) Subsidies received from the Government:


10,000 lei               Bank account      =     %                                                       10,000 lei

Revenues from subsidies                 7000 lei
Deferred income                               3000 lei


 

c) Rent received


20,000 lei           Bank account     =   %                                                20,000 lei

Revenues from rent                     17,500 lei
Deferred income                           2500 lei


 

The extracts from the Income Statement and the Statement of Financial Position are presented in Table 10.2.

Table 10.2 Extract from the Financial Statements

Income statement Lei
Revenues from subsidies 7000
Revenues from rent 17,500
Expenses with subscriptions (6000)
Statement of financial position Lei
Current assets
Prepayments 1000
Current liabilities
Accruals and deferred income 5500