29:10 Don’t you Debt cash because you received the income even though it has been “earned”? I was taught to: debt cash and credit deferred income. And in the next financial period you credit rent income and debt deferred income.
Hi Gonolemo, We have received R1 600 in rent income. Initially we would record this - Cr: Rent Income 1 600 & Db: Bank 1 600. However, as this amount only pertains to the following financial year we adjust it the entry by taking the 1 600 out of rent income. We therefore debit rent income and credit deferred income (income received in advance)
If interest is capitalized this means that it is directly added on the loan (Dr: Interest on loan / Interest Expense & Cr: Loan) If interest is not capitalized this means we don't add it on the loan (Dr: Interest on loan / Interest Expense & Cr: Bank
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29:10 Don’t you Debt cash because you received the income even though it has been “earned”?
I was taught to:
debt cash and credit deferred income.
And in the next financial period you credit rent income and debt deferred income.
Hi Gonolemo,
We have received R1 600 in rent income. Initially we would record this - Cr: Rent Income 1 600 & Db: Bank 1 600.
However, as this amount only pertains to the following financial year we adjust it the entry by taking the 1 600 out of rent income.
We therefore debit rent income and credit deferred income (income received in advance)
What must you do when the say interest is capitalized
when interest is capitalised you add it to long term liabilities
If interest is capitalized this means that it is directly added on the loan (Dr: Interest on loan / Interest Expense & Cr: Loan)
If interest is not capitalized this means we don't add it on the loan (Dr: Interest on loan / Interest Expense & Cr: Bank
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