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How is the 2800 an expense . Only 1850 is expense and 950 is accrual or a current liability. Kindly help me on this on . How is 2800 appearing in sopl and sofp
$1,850 is the total amount that has been paid. However that was only for the first 9 months of the period. We need to total cost of using the telephone for the whole 12 months and so the total expense is 1,850 plus the 950 that is owing for the remaining 3 months.
and Accruals account is something like money we owed to the suppler,
a payable, so it should appear on SOFP,
a liabilities under current liablities.
Hello, you didn’t balance off the accrual or the prepayment t-account. Did I miss that they should not be balanced? is this connected with them being added to the SOPL?
He balanced both the prepayment and accruals expenses. For the prepayment b/f $1000 he balanced it to zero by crediting the $1000 and debiting the $1000 to insurance a/c. The same procedure applys for accrual but remember accruals are a liability so the b/f is a credit so you need to debit in order to reduce it to zero and credit the insurance a/c. Hope that helps
the last step of the Accruals Account is draw double lines under a blank both sites,
write $950 within the double lines,
find the missing figure on debit site,
mark the mssing figure which is $950 balance c/d on debit site
and balance b/d $950 below the double lines on credit site .
and this $950 balance b/d will be brought down to the next financial period at the same site and same account .