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The electricity account for the year ended 30 June 20X3 was as follows:
$
Opening balance for electricity accrued at 1 July 20X2 300
Payments made during the year:
1 August 20X2 for three months to 31 July 20X2 600
1 November 20X2 for three months to 31 October 20X2 720
1 February 20X3 for three months to 31 January 20X3 900
30 June 20X3 for three months to 30 April 20X3 840What was the expense charged to the statement of profit or loss for the year ended
30 June 20X3 and the accrual at 30 June 20X3?Could you work it out for me and tell me the ans? Kaplan has a wrong ans I believe.
The accrual at 30 June X2 is for 2 months and is therefore 2/3 x 840 = 560.
The cash paid during the year to 30 June X3 was 600 + 720 + 900 + 840 = 3060
Therefore the expense for the year = 3060 – 300 + 560 = 3320.
What are the answers in your Kaplan book?
Oh ty for the breakdown,got mixed up at the start.
Also,in this question,
In the year ended 30 September 20X8, Fauntleroy had sales of $7,000,000. The year-end
receivables amounted to 5% of annual sales. At the year end, Fauntleroy’s specific
allowance for receivables equated to 4% of receivables. He also identified that this amount
was 20% higher than at the previous year end.
During the year irrecoverable debts amounting to $3,200 were written off and debts
amounting to $450 and previously written off were recovered.Its mentioned “Specific allowance of 4%”, but usually in the lectures the allowance where % was there was general and we calculate it after subtracting all other Irrec. Debts & allowances , but here they calculated it on the initial RECEIVABLES AMT 350,000 without subtracting anything,is it because its specific and not general?
The question says that the irrecoverable debts were written off during the year.
Therefore the 350,000 at the end of the year was already after having written off the debts.In future, please start a new thread when asking about a different topic. (The reason is that our answers are to benefit everyone, and people use the search option to get help on specific topics.)
Sir, regarding this question,
The electricity account for the year ended 30 June 20X3 was as follows:
$
Opening balance for electricity accrued at 1 July 20X2 300
Payments made during the year:
1 August 20X2 for three months to 31 July 20X2 600
1 November 20X2 for three months to 31 October 20X2 720
1 February 20X3 for three months to 31 January 20X3 900
30 June 20X3 for three months to 30 April 20X3 840What was the expense charged to the statement of profit or loss for the year ended
30 June 20X3 and the accrual at 30 June 20X3?1) “1 August 20X2 for three months to 31 July 20X2 600 usd ”
First of all, the accounting period is from 1st July 20X2 till 30 June 20X3, therefore can only calculate the expense incurred from 1st July 20×2 till 31st July 20X2 (600 usd / 3= 200 usd), right?
2) “Opening balance for electricity accrued at 1 July 20X2 300 usd”
What i understand from the lecture notes is if the 300 usd has been paid within this accounting period “1st July 20×2 till 31st July 20X2”, I have to deduct the 300 usd from this year accounting period incurred expense. But it did not tell we pay the 300 usd withihn this accounting period, so why need to deduct the 300 usd?
The total cash paid during the period is 600 + 720 + 900 + 840 = 3,060.
Part of this payment is for the amount that was owing at the end of last year and therefore only the remaining 3,060 – 300 = 2,760 relates to the current year.
At the end of June they are still owing for 2 months (May and June) and therefore we would estimate an accrual needed of 2/3 x 840 = 560.Therefore the total expense for this year is 2,760 + 560 = 3,320.
Hi Sir,
After I have studied twice of the lecture notes, I still think that the total expense is not 3320 usd.
Please correct me if i am wrong.first, the accounting period is from 1st July 20X2 till 30th June 20X3. From this statement “1 August 20X2 for three months to 31 July 20X2 600 usd”. it means we paid 600 usd on 1st August 20×2 for expense incurred from 1st May 20X2 till 31st July 20X2. Since the accounting period starts from 1st July 20X2, the expense has to be incurred from 1st July 20X2 (600 usd /3= 200 usd). The expense incurred from 1st May 20X2 till 30th June 20X2 is 400 usd which is accrual.
The accrual brought forward has turned out to be wrong, but we cannot go back and change last year so it is effectively corrected this year (and what I typed out in my previous reply is correct).
You say that you have studied the notes, but have you watched the free lectures working through the notes because I explain this point in the lectures. There is no point at all in using the notes without watching the lectures. They are lecture notes and not a study text and it is in the lectures that I explain and expand on the notes.
Hi Sir,
Of course I did study your video lecture as well.
the cash paid during the 1st July 20X2 till 30th June 20X3 is (600 + 720 + 900 + 840 )= 3060 usd.
Less : Accrued at end last year (from 1st May 20X2 till 30th June 20X2) = 400 usd
Or the accrued that brought forward from last accounting period actually we just need to take the 300 usd from “Opening balance for electricity accrued at 1 July 20X2”, and therefore minus the 300 usd like what you mentioned and not workout the accrued at end of last year by myself “400 usd”.Add: Accrued at end this year: 2/3 x 840 = 560.
If this is the case, then i can fully understand.
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