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Diesel fuel in inventory at 1 November 20X7 was $12,500, and there were invoices awaited for $1,700. During the year to 31 October 20X8, diesel fuel bills of $85,400 were paid, and a delivery worth $1,300 had yet to be invoiced. At 31 October 20X8, the inventory of diesel fuel was valued at $9,800. What is the value of diesel fuel to be charged to the statement of profit or loss and other comprehensive income for the year to 31 October 20X8?
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Entries in nominal ledger ; Diesel in hand ; open bal. of diesel 12500 (debit side) ; cash 85400 (debit side) ; Diesel Expn 88100 (credit side); close bal. of diesel 9800(bal. figure in credit side)Diesel Expense ; Diesel in hand 88100 (Debit side) ; closing accruals 1300 (debit side) ; opening accrual 1700 (credit site) ; Diesel expense to be transferred to SOPL 87700 (balancing figure in the credit side)
This is what i think is correct; i am confused regarding entries in the T Account of Diesel in hand, Diesel expense, accruals, diesel payable accounts; pls explain if possible.
You will not be tested on the double entry for this sort of question in the exam (and you will not have the time anyway to write up the t-accounts). The exam is not primarily a double entry exam!!
During the year, the paid $85,400. $1,700 was for amounts owing at the start of the year, and at the end of the year they are still owing another $1,300.
So the diesel purchased during the year = 85,400 – 1,700 + 1,300 = 85,000They already had 12,500 diesel in inventory at the start of the year, and still have $8,900 at the end of the year. So the diesel used during the year (which is charged to the SOPL) = 85,000 + 12,500 – 9,800 = $87,700
You must have an answer in the same book in which you found the question. In future you must ask about whatever it is in the answer that you are not clear about, and then I will help you.
sory sir, i have understood the answer you have explained. i was just struggling regarding entry in the T accounts in the Nominal Ledger. i was so frustrated that i posted my confusion.
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