Havind problems calculating accruals and prepayments

nabutt
nabutt Registered Posts: 86 ? ? ?
i am really struggling calculating accruals and prepayments wtever i do i always messed up the months so can anyone help me understand

e-g

prepayments

on 1st sep03 the partnership paid rates of £3000 covering 3 months to 30th nov 03

they calculate it as 3000*8/12
how they do it ????

accruals

On 31 August 2003 the partnership paid a telephone bill of £303.90, covering the three months to
31 July 2003. The bill for the following three months has not yet been received. Telephone bills are
treated as office expenses.

its same for that 303.90*8/12

can sumone explain it


thanxxx

Comments

  • Diannew
    Diannew Registered Posts: 2,814
    nabutt wrote: »
    i am really struggling calculating accruals and prepayments wtever i do i always messed up the months so can anyone help me understand

    e-g

    prepayments

    on 1st sep03 the partnership paid rates of £3000 covering 3 months to 30th nov 03

    they calculate it as 3000*8/12
    how they do it ????

    accruals

    On 31 August 2003 the partnership paid a telephone bill of £303.90, covering the three months to
    31 July 2003. The bill for the following three months has not yet been received. Telephone bills are
    treated as office expenses.

    its same for that 303.90*8/12

    can sumone explain it


    thanxxx

    What was the year end?
  • A-Vic
    A-Vic Registered Posts: 6,970
    was about to ask the same myself


    if year end sept as i suspect you need to (prepayment) divded the payment by 3 then one month will be payment 2 months will be prepayment for next new year

    ETB dont forget to include prepayment also as a debit
  • Rachey
    Rachey Registered Posts: 589
    If you're having trouble with accruals and pre-payments then on the AAT website there is an e-learning link for Unit 5. There's loads of options like depreciation and bad debts etc... Just scroll down to accruals and pre-payments. I've found that link very helpful indeed.

    Good Luck!!
  • A-Vic
    A-Vic Registered Posts: 6,970
    Rachey wrote: »
    If you're having trouble with accruals and pre-payments then on the AAT website there is an e-learning link for Unit 5. There's loads of options like depreciation and bad debts etc... Just scroll down to accruals and pre-payments. I've found that link very helpful indeed.

    Good Luck!!

    Its brill used it myself am sure its what got me through
  • rachy1975
    rachy1975 Registered Posts: 366
    nabutt wrote: »
    i am really struggling calculating accruals and prepayments wtever i do i always messed up the months so can anyone help me understand

    e-g

    prepayments

    on 1st sep03 the partnership paid rates of £3000 covering 3 months to 30th nov 03

    they calculate it as 3000*8/12
    how they do it ????

    accruals

    On 31 August 2003 the partnership paid a telephone bill of £303.90, covering the three months to
    31 July 2003. The bill for the following three months has not yet been received. Telephone bills are
    treated as office expenses.

    its same for that 303.90*8/12

    can sumone explain it


    thanxxx

    the 3000 is an prepayment of 1000 as your year end is sept...divide the 3000 into 3 to give you the month
    the accrual 303.90 is 202.60 as again you divide it into 3 and x by 2 as you need 2 months worth
    did this one yesterday
    :001_smile:
  • nabutt
    nabutt Registered Posts: 86 ? ? ?
    thanks for all your help

    i understand the prepayment but still didnt understand the accrual example how they calculate that :confused1:
  • Richard
    Richard Registered Posts: 373
    Your year end is September, however, you only have telephone expenditure in the P&L for upto July - as you need to have an amount for each month, you need to estimate a figure for August and September.

    If you base this on your previous bill of £303.90, you will need to accrue two months expense.

    Therefore, if your previous bill covers 3 months 303.90/3 = 101.30 average per month. £101.30 x 2months will give you an estimated charge of £202.60.
  • nabutt
    nabutt Registered Posts: 86 ? ? ?
    thanks for all the help
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