Accrued expenses – Reply for Tom

Hi Tom

I can’t reply to your messaage so have had to create a new thread.

Create a T account for Light and Heat

1.1.04 On the credit side put the opening accrual of 240
31.1.04 Bill paid of 250 – debit (creating an additional 10 charge)
31.3.04 Bill 260 – debit
30.6.04 Bill 220 – debit
30.9.04 Bill 210 – debit
31.12.04 Bill 230 – debit
31.3.05 – Accrual 230 – debit (based on previous qtr)

This comes to 1160. You don’t adjust prior periods as they are closed unless it’s a material adjustment which this isn’t.

An accrual is an estimate so there are likely to be discrepancies between accruals and actual amounts. The aim is to estimate as accurately as possible.

Pippa