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the electricity account for the year ended 30 june 2009,was as follows ;
opening balance for electricity accrued at 1 july 2010 $300
payments made during the year
1 august 2010 for three months to 31 july 2010 $600
1 november 2010 for three months to 31 october 2010 $720
1 february 2011 for three months to 31 january 2011 $900
30 june 2011 for three months to 30 april 2011 $840
what is the charge for electricity?
accrued at 30 june 2011 charge to the income statmt year ended 30 june 2011entry? entry?
We want the total expense for the year from 1 July 2010 to 30 June 2011.
the total cash paid was 600 (on 1 August) + 720 (on 1 November) + 900 (on 1 February) + 840 (on 30 June) = $3060.
However, at 1 July 2010 we were already owing 300, so part of the cash paid this year is that 300 which was last year.
At 30 June 2011 we have only paid up to 30 April, and so we still owe for May and June 2011. All we can do is use the last payment to estimate how much is owing for these 2 months. The last payment was 840 for 3 months, and so the two months owing will be 2/3 x 840 = 560. This needs adding on to get the total expense for our twelve months.So….the total expense for this year is 3060 – 300 + 560 = $3,320
(I don’t know why you have typed “entry?entry?”. To do this in t-accounts really would waste time and would not be required anyway.)
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