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Hello! I have a problem in solving this question. Please somebody be so kind and help me!
At 1 July 2008 there was an accrual for electricity of $600.
The payments made during the year to 30 June 2009 were as follows:1 August 2008, for 3m to July 2008 1200
1 November 2008, for 3m to 31 October 2008 1440
8 February 2009, for 3m to 31 January 2009 1800
30 June 2009, for 3m to April 2009 1680Which of the following is correct at 30 June 2009?
Accrual Income Statement
A) $Nil $6120
B) $560 $6640
C) $1120 $6640
D) $1120 $6840I know that correct answer is C. But I don`t know how to get it. How can we even know the accrual if the last payment was in 30 June 2009, that is in our year, for the months of April, Mart and Februaty 2009?
Thank you in advance for the help!
The last payment was for 3 months to end of April 2009.
Since our year end is 30 June, we need to accrue for 2 months (May and June).All we can do (and what we always do in the exam if there is no more information) is base the amount on the last payment. The last payment was for 3 months and was for 1680.
So the estimate of the amount owing for the 2 months we need is 2/3 x 1680 = 1120.With regard to the expense in the Statement of profit or loss:
Our year is 1 July 2008 to 30 June 2009
July 2008 = 600 (1200 paid, less accrual of 600)
Aug to Oct 2008 = 1440
Nov to Jan 2009 = 1800
Feb to Apr 2009 = 1680
May and Jun 2009 = 1120 (as above)So total = $6640
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