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So am having a bit of a problem understanding this topic.
Question.
At the 31 March 20×2 a company had oil in hand to be used for heating costing $8,200 and an unpaid heating oil bill for $3,600.
At 31 March 20×3 he heating oil inn hand was $9,300 and here was an outstanding heating oil bill of $3,200.
Payments made for heating oil during the year ended 31 March 20×3 totalled $34,600.
Based on these figures, what amount should appear in the company’s statement of comprehensive income for heating oil for the year?
A. $23,900
B. $36,100
C. $45,300
D. $33,100Could you explain by giving me a step by step approach, to arrive at the answer.
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During 2003, the payments totalled 34600, if use the outstanding heating out bill it says that on March 31, 2002 it was 3600 that means that it will be the opening for 2003 on April 1. Now place the opening and closing of outstanding bill in the account and place the payment on Debit Side of the account as accruals debit on decrease.
When u will find out the difference, it will be 34200, it is the payment for current year’s oil meaning thereby that the company paid only 400 of the outstanding balance.Oil in hand on March 31, 2002 will be the opening balance for 2003.
place the opening and closing amounts and place the 34200 we found above at the debit side so as to show the payment for oil i.e. oil debit and cash credit.
The difference of oil account will be the expense for the year showing the consumption of oil.@muhammadosama,
did you receive answer D?I have next calculations:
$34,600 – payments during current year
$8,200 – oil in hand, to be spent in current year
($3,600) – bill for expenses for previous year
($9,300) – oil in hand, that we paid this year but will use in next year
$3,200 – outstanding bill for current year, but to be paid in next yearTotal: $33,100. Answer D.
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