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Hi John,
I struggled with the following and hoping you can help…
The electricity account for the year end 30 June 2003 was as follows:
Opening balance for electricity accrued at 1 July 2002 is £300
Payments made during the year:
1st aug 2002 for 3 months to 31 July 2002 £600
1 November 2002 for three months to 31 October 2002 £720
1 Feb 2003 for three months to 31 Jan 2003 £900
30th June 2003 for 3 months to 30th April 2003 £840What’s the expense charged to the SOPL for year ended 30th June 2003 and what’s the accrual at 30th June 2003?
Answer in Kaplan is: Accrual is £560 and expense £3320
I worked out the expense answer to be 3220:
300 opening baI I thought to excluded as accrued, so last years expense.
200 (600/3 as can only claim one month for this years expense), +720+900+840+560 (840/3 multiplied by 2 for the accrual in relation to this year)=3220
I can’t see what I’m doing wrong.
Could you help?
Thanks
Ps would you recommend BPP study texts and exam kits over Kaplan, or are they pretty much the same?
The total paid during the year is 600 + 720 + 900 + 840 = 3060.
Given that there is an opening accrual of 300 and a closing accrual of 560, the expense for the year is 3060 – 300 + 560 = $3,320.
(The accrual of $300 at the end of the previous year turns out to have been wrong (it should have been $400). However, as I explain in my free lectures, we cannot now go back and correct last year and the correction occurs automatically this year.)
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