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plz explain this
the electricity bill payable accaount for the year ended 30 june 2008 was as follows
opening balance for electricity accured at 1 july 2007 $800
1 aug 2007 for three months to 31 july 2007 $900
1 nov 2007 for three months to 31 oct 2007 $700
1 feb 2008 for the months to 31 jan 2008 $930
30 june 2008 for three months to 30 april 2008 $ 930
which of the following is the appropriate entry for electricityaccured at charged to income statement
june 2008 year ended 30 june2008
A 620 3190
B 580 3480
C 620 3520
D 560 3720
answer is A but whyEither you have copied the question wrongly (check the bill that was paid on 1 February, and check that the opening accrual was actually 800 and not 600), or else there is a typing error in your book, because none of the choices are correct.
As at 30 June 2008, they still owe for May and June – 2 months. Given the information available we can only assume that it will stay at the same rate as the previous bill which was 930 for 3 months to April. Therefore the accrual is 2/3 x 930 = 620.
As far as the expense is concerned, the total cash paid during the year = 900 + 700 + 930 + 930 = 3460.
However there was an opening accrual at the end of last year and we still owe the accrual at the end of this year, so the actual expense for this year in the Statement of profit of loss is 3460 – 800 + 620 = 3280
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