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prepayments

Forums › FIA Forums › FA2 Maintaining Financial Records Forums › prepayments

  • This topic has 4 replies, 2 voices, and was last updated 9 years ago by iyamu.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • March 5, 2016 at 12:11 am #303504
    iyamu
    Participant
    • Topics: 286
    • Replies: 171
    • ☆☆☆

    Please solve this calculations clearer to me.

    Hello Sir,

    Please i have the following questions on prepayment

    and accrual.

    Qst. 1
    In February 2013 a company paid an electricity bill

    of $450 for the three months to 31/1/2013.
    In March 2014, the company paid an electricity bill

    of $600 for the three months to 31/1/2014.
    Bills were also paid in may, August and November

    2013 amounting to $2000 for electricity from

    1/2/2013 to 31/10/2013.
    What electricity expenses should be shown in the

    income statement for the year ended 31/12/2013 and

    what is the accrual or prepayment as at 31/12/2013?

    March 9, 2016 at 8:36 am #304654
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    450 x 1/3 = relevant to Jan 2013 = 150

    600 x 2/3 = relevant to Dec and Nov 2014 = 400 (tihis would be an accrual at 31/12/2013 as owed then)

    All the 2,000 relates to 2013

    Expense for 2014 = 150 + 2000 + 400 = 2,550.

    March 9, 2016 at 8:45 am #304655
    iyamu
    Participant
    • Topics: 286
    • Replies: 171
    • ☆☆☆

    Thank you sir but the question demands Electricity expense for 31/12/2013 that will appear in the income statement and not for 2014.

    March 9, 2016 at 8:50 am #304657
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    Sorry, my slip, meant to say 2013:

    Expense for 2013 = 150 + 2000 + 400 = 2,550

    March 9, 2016 at 9:11 am #304663
    iyamu
    Participant
    • Topics: 286
    • Replies: 171
    • ☆☆☆

    Thank you so much sir . Now I got it.

  • Author
    Posts
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