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accrual

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › accrual

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by Nikitagarwal.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • October 21, 2021 at 4:50 pm #638727
    Nikitagarwal
    Participant
    • Topics: 153
    • Replies: 146
    • ☆☆☆

    Ques – Impairment of assets
    The following trial balance relates to Hume at 30 June 20X7:
    $ $
    Revenue 390,000
    Cost of sales 210,600
    Distribution costs 6,800
    Administration expenses 12,700
    Loan interest paid 3,600
    Property – cost 150,000
    Property – depreciation at 1 July 20X6 38,400
    Plant and equipment – cost 176,200
    Plant and equipment –
    depreciation at 1 July 20X6 48,600
    Trade receivables 31,600
    Inventory – 30 June 20X7 18,100
    Bank 1,950
    Trade payables 25,400
    Ordinary shares $1 50,000
    Share premium 9,000
    12 % Loan note (issued 1 July 20X6) 40,000
    Taxation 1,300
    Retained earnings at 1 July 20X6 11,450
    ––––––– –––––––
    612,850 612,850

    Can you please calculate the finance cost here ?
    I am unable to understand how did they get 1200 also included in it? instead tsnt 4800 should have been added ?

    October 23, 2021 at 9:15 am #638851
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6473
    • ☆☆☆☆☆

    Hi,

    The finance cost if 4,800 but given that 3,600 has already been paid then we need to accrue for the difference of 1,200 within the accounts. This will increase the finance cost from 3,600 to 4,800 and record an interest accrual in the SFP of 1,200.

    Thanks

    October 23, 2021 at 5:09 pm #638930
    Nikitagarwal
    Participant
    • Topics: 153
    • Replies: 146
    • ☆☆☆

    Yeah it makes sense now.. Thank you Chris !

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