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BabaBlast [244]
3 years ago
11

How would a payment for rent paid in advance be classified? Multiple Choice Claims exchange transaction Asset use transaction As

set source transaction Asset exchange transaction
Business
1 answer:
kvv77 [185]3 years ago
4 0

Answer:

Asset exchange transaction

Explanation:

Prepaid rent is an asset exchange transaction because cash (asset) is credited while prepaid rent (also an asset) is debited.

Rent paid in advance is recorded as follows:

Dr Prepaid rent

    Cr Cash

As the months go by, the prepaid rent is credited and rent expenses is debited.

Dr Rent expense month 1

    Cr Prepaid rent month 1

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Total equivalent units of material  = 900

Explanation:

<em>Equivalent units are notional whole units which represent incomplete works are used to allocate cost to work in progress and completed units</em>

<em>Under the weighted average method of valuation, to account for completed units, it is assumed that the entire degree of work required is done in the period under consideration. So there is no separation of the completed units into opening inventory and fully worked. </em>

Equivalent unit = Degree of completion × units

Item                           units                                    Equivalent units

Completed units        600         100% × 600  =     600

Closing inventory        300        100%× 300  =      <u>300</u>

Total equivalent units of material                          <u>900</u>

Note simply because materials are added at the beginning of the process, it is assumed that all the quantity required would have been added. Hence the degree of completion for materials is 100% .

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Answer:

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