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Sir, I’ve no problem with the calculation but my question is why our answer is not “Prepayment of $1090” ?
As Dave is paying in advance for 3 months? So, at the year end 1 month is still pre-paid.Dave Hull is preparing his final accounts for the year to 30 April 20X6. The last payment Dave made for
electricity was in March 20X6 when he paid $3,270 for the three months to 28 February 20X6.
What adjustment does Dave need to make when preparing his final accounts for the year to 30 April
20X6?
A A prepayment of $1,090
B An accrual of $1,090
C A prepayment of $2,180
D An accrual of $2,180Hi ather hope ur good, was going through and saw your question.
– So if u notice the year ends on 30th April 20×6.
– his last payment was on march for 3 MONTHS TO: to 28th February 20×6.
– Now this statement means he paid electricity bill for December, January and February.
– This is because electricity bills are usually paid after the electricity is used then a bill is sent after the electricity is already used to have accurate charges to the customer.
– so don’t confuse yourself thinking the bill paid in march was for march, April and May. NO!
– The payment was for 3 month to 28th February. this means that on march he paid his bill due from December 20X5 to February 20×6 to complete his 3 month bill.
– This means that at the end of April 20×6, he has not yet paid for march and April.
– therefore the charge per month is calculated as being the same as the charge per month for the previous three months.– $3270 divide by 3.
– makes $1090 per month.
– hence accruals for the 2 months march and April will be $1090 times 2
– giving $2180 accruals at the year end.My bad sir, Sorry took a lot of time of yours. I misunderstood the question. Really appreciate for the support sir.
ather, if you want to ask the tutor something directly, please use the ask the tutor forum-
https://opentuition.com/forum/ask-acca-tutor-forums/ask-the-tutor-acca-fa/
This forum is primarily designed for students to help one another. Hope this helps.
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