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The year end of M Co is 30 November 20X0.The company pays for its gas by a standing order of $600 per month. On 1 December 20W9, the statement from the gas supplier showed that M Co had overpaid by $200. M Co gas bills for the four quarters commencing on 1 December 20W9 and ending on 30 November 20X0 for $1300,$1400,$2100,$2000 respectively
Which of the following is the correct charge for gas in M Inc’s statement of profit or loss for the year ended 30 November 20X0?
1st question:here,20W9 means 2009 but 20X0 means 2010???
2nd question; the answer is $6800(1300+1400+2100+2000)l can not understand what $200 and $600 affected??
1. Yes – 20X0 is the year after 20W9. But don’t worry about that for the actual exam – the exam will use real years and not use letters 🙂
2. The expense for the year is the total invoiced for the 12 months (as per the answer). The fact that they had actually paid 600 a month and that they had overpaid at the start of the year, is only relevant in deciding the amount of the under or over payment at the end of the year. However the question does not ask for the over or under payment (which would appear in the SOFP) and they do not affect the total expense for the year – the expense is the gas used, which is the total of the 4 invoices.
?n that case,the overpayment of 200$ belongs to 20W9 and is prepayment in 20W9??
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