Accrual and prepayments

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May 26, 2015 at 6:12 pm #249316
Steven
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Anders is analysing his accounts for the year ended 31 May 20X0. He has not yet made adjustments for the following:
(1)
Electricity expenses for the three months to 31 May 20X0 are estimated to be $250
(2)
Insurance of $528 for the 12 months to 31 December 20X0 was paid on 1 January 20X0
What is the net impact on profit when the appropriate adjustments are made?
May 27, 2015 at 7:35 am #249425
John Moffat
Keymaster
- Topics: 57
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When they record the electricity accrual it will reduce the profit by 250.
When they deal with the insurance prepayment it will increase the profit by 7/12 x 528 = 308.
Have you watched the free lectures on accruals and prepayments?
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