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Toni

Profile picture of Toni
Active 10 years ago
  • Topics: 3
  • Replies: 1
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  • August 3, 2014 at 8:09 pm #180641
    mysteryToni
    Member
    • Topics: 3
    • Replies: 1
    • ☆

    Thank You very much.

    One last question,

    Do you have like a specific video but getting to know/ introduction to Computerised/ Software Accounting?

    Secondly

    If we Accrue for e.g a old telephone bill. but the bill never comes ( we have switched supplier)

    How would you Release the accrual? what would be the double entry?

    ThankYou Very much :)!

    EDIT: I don’t understand this as well OVER ACCURALS

    ABC accounting staff estimates that the amount of its phone bill for the month of April will be $5,500 so it will be

    Debit Credit
    Telephone expense 5,500
    Accrued expenses (liability)
    5,500

    At the beginning of the next month (May), the accounting system generates a reversing entry, which is:

    Debit Credit
    Accrued expenses (liability)
    5,500
    Telephone expense
    5,500

    Finally, later in May, the phone company sends ABC the April phone bill in the amount of $4,250. The invoice is reduced because of a combination of a rate decrease and ABC having fewer land lines in use. The entry is:

    Debit Credit
    Telephone expense 4,250
    Accounts payable
    4,250

    Thus, ABC initially creates an accrual of $5,500 that exceeds the actual amount of the expense by $1,250. The over accrual creates $1,250 too much expense in April, and $1,250 too little expense in May.

    I understand EVERYTHING except that last line 🙁

    In April we thought it would be 5500 , but it was only 3250, SO THE I/S WILL Have HIGHER Expense

    BUT ??? HOW does that mean it will be little in May????

    The T ACCOUNT Will be

    Telephone
    ———————————————————————-
    April 5500 [ I/S 5500
    _____ [ ______
    5500 [ 5500
    [
    May 4250 [ Revers Accrual 5500

    Accrual
    ———————————————————————————-
    April C/f [ Telephone 5500
    ] bf 5500

    May 5500 (revers Accr)
    ??????? I don’t understand that

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