PRC-1 · Chapter 4 · Question 24 of 100
A tenant pays an annual rent of Rs. 24,000. Payments are made quarterly in advance on 1 January, 1 April, 1 July, and 1 October. What is the prepaid rent balance in the tenant's books at 30 November?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Rs. 2,000
Explanation
The annual rent is Rs. 24,000, so quarterly rent is Rs. 6,000. The payment on 1 October covers October, November, and December. At 30 November, only one month (December) remains unused. 24,000 / 12 = 2,000 per month. Therefore, prepayment is Rs. 2,000.
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