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Hi sir
I am struggling with this question.
Could you help me, please.The question:
The following transactions relate to Rashid’s electricity expense ledger account for the year ended 30 June 20X9:Prepayment brought forward $550
Cash paid $5,400
Accrual carried forward $650What amount should be charged to the statement of profit or loss in the year ended 30 June 20X9 for electricity?
You must surely have an answer to this in the same book in which you found the question, so in future please ask about whatever it is in the answer that you are not clear about and then I will explain.
550 was prepaid at the end of last year and so is an expense of this year. The cash paid relates to this year, but at the end of this year they are still owing 650 for this year.
So the total expense for the year is 550 + 5400 + 650.
Have you watched my free lectures on this? The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
For sure, I am sorry for inconveniences that I made. Next time I will be more attentive.
Thank you for explanation, that is clear now.
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