Leaving cert accounting question

chelliam1

Can anyone tell me why in the 2013 incomplete records the question says that a $72000 loan is being paid off in 12 equal instalments that become due on the 1st of January and yet the amount due is $12000 not $6000. Or even why its included at all since the balance sheet is for the 31st? Thanks.

Mr Pseudonym

There's nothing in the question that shows that the first instalment had been paid. Hence, assume it hasn't been. I don't understand the second question: the loan instalments haven't been paid, as was agreed. Had they been, the amount would have been incorporated as a credit in Bank.

Calvin

All I know is that 2 installments are due for the year, that's why it's €12000 instead of €6000. As regards the balance sheet question, I'm not sure. I just took everything as it was to try not confuse myself further :P

chelliam1

What I mean to say is that the loan repayments don't commence until the first of 2013 when the account is on the last day of 2012. Why would both instalments be due, does one not become due the next day and the other in six months time?

Mr Pseudonym

chelliam1 wrote: »

What I mean to say is that the loan repayments don't commence until the first of 2013 when the account is on the last day of 2012. Why would both instalments be due, does one not become due the next day and the other in six months time?

I'm blushing - I misread the question!

It's because Current Liabilities is 'Creditors: amounts falling due in less than one year' - and, as you said, the second instalment is due in six months.

chelliam1

thanks, that makes perfect sense now!