- This topic has 3 replies, 2 voices, and was last updated 7 years ago by
.
- Posts
The electricity account for the year ended 30 June 20X1 was as follows
Opening balance for electricity accrued at 1 July 20X0 $300
Payments mande during the year:
1 August 20X0 for 3 months to 31 July 20X0 $600
1 November 20X0 for 3 months to 31 October 20X0 $720
1 February 20X1 for 3 months to 31 January 20X1 $900
30 June 20X1 for 3 months to 30 April 20X1 $840
1 August 20X1 for 3 months to 31 July 20X1 $840What is the charge to SPL year ended 30 June 20X1?
My answer was $3220 (1/3* 600=200 plus 720 plus 900 plus 840 plus 2/3*840= 560) but the answer from BPP revision kit was $3320 (Under electricity account, Dr. bank 600+720+900+840+560 ; Cr. Bal 300 , SOPL 3320)
I still don’t quite understand how to get $3320. I would really appreciate your help if you can let me know what is wrong with my workings. Thank you!
You add up the total payments made during the year, and then subtract the opening accrual (300) and add the closing accrual.
The reason your answer is different is that it turned out that the opening accrual of 300 should really have been 200. However, as I explain in my free lectures, we cannot go back and correct last year and so the 100 is accounted for this year.
- The topic ‘Accruals and prepayment’ is closed to new replies.