Help journals iin Unit 11

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carolyn
carolyn Registered Posts: 28 Regular contributor ⭐
My question is on page 6 of the mock exam from Kaplan.
In task 1.3, according to further information "interest on the debentures for the last 6 months of the year has not been included in
the accounts in the trial balance. " , I do a journal which is
DR interest 1500
CR interest payable 1500


The answer provided by Kaplan is
DR interest 1500
CR Accrual 1500


However,I have noticed in all of the past exam papers(Such as task 1.1 of June 2009, task 1.1 of Dec 2008 and task1.1 of June 2008)in my revision pack, the answer is
DR interest x
CR interest payable x (which is not included in accrual account)


On page116 of text book 2009/10, it shows the double entry is
DR interest payable(finance cost)
CR Trade and other payables


I am confused which one is correct?


Many thanks


carolyn
«1

Comments

  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    Interest payable, Accurals and Trade payables are all the same thing.
    On the balance sheet (or whatever it's called now) all 3 of these go in the 'Trade Payables' bit under current liabilities.
    It's just the wording of it
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    I use;
    DR Finance Costs 1500
    CR Accrual 1500
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    You wouldlnt put it as accural in the account but just credit Liabilities in the b/s (show a working when you come to do the account)

    I.E wk1
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    I personlay would do
    Dr Intrest
    Cr Intrest Payable

    My understaning of an accrual is when you pay something after the close of year end that then puts the cost in to the new financial year when realy it relates to the old financial year.

    All trhe question says is it's been omitted from the accounts not that it has been paid in the new financial year.
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    im sticking to the kaplan book
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    dobbieobby wrote: »
    Interest payable, Accurals and Trade payables are all the same thing.
    On the balance sheet (or whatever it's called now) all 3 of these go in the 'Trade Payables' bit under current liabilities.
    It's just the wording of it
    Intrest Payable, Accruals and Trade payable are not the same thing they all tend to go together as one title in the balance sheet but when it comes to journals or evan in the extended trial balance(Intemediate Level) they need to be listed separately, as each account refers to diffrent types of payments.
  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    I know that! But in this exam it all goes under 'Trade Payables' I was just trying to help!
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Intrest Payable, Accruals and Trade payable are not the same thing they all tend to go together as one title in the balance sheet but when it comes to journals or evan in the extended trial balance(Intemediate Level) they need to be listed separately, as each account refers to diffrent types of payments.

    But this accrul we know its to do with interest and thats why we dont add it to accruals and add it directly to interest payable in the balance sheet but we each do it our own way and as long as you show how you came to your answer they will understand
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    A-Vic wrote: »
    But this accrul we know its to do with interest and thats why we dont add it to accruals and add it directly to interest payable in the balance sheet but we each do it our own way and as long as you show how you came to your answer they will understand
    It's not an accrual tho. the figure has just been left out of the accounts it has already been paid within the current year.
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    at Kaplan we've been given examples like that and been told to Dr Accruals in the SFP
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    I was taught to Dr Intrest and Cr intrest payable, which is what all the past papers do aswell.
    As it's been left out the accounts not paid late.
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    i suppose it wouldn't matter as it still goes in the same place on SFP. Probably get a mark for either method
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    It's not an accrual tho. the figure has just been left out of the accounts it has already been paid within the current year.

    Didnt i say that?
  • dobbieobby
    dobbieobby Registered Posts: 231 Dedicated contributor 🦉
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    <<nods quietly
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    dobbieobby wrote: »
    <<nods quietly

    :lol:
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    carolyn wrote: »
    My question is on page 6 of the mock exam from Kaplan.
    In task 1.3, according to further information "interest on the debentures for the last 6 months of the year has not been included in
    the accounts in the trial balance. " , I do a journal which is
    DR interest 1500
    CR interest payable 1500


    The answer provided by Kaplan is
    DR interest 1500
    CR Accrual 1500


    However,I have noticed in all of the past exam papers(Such as task 1.1 of June 2009, task 1.1 of Dec 2008 and task1.1 of June 2008)in my revision pack, the answer is
    DR interest x
    CR interest payable x (which is not included in accrual account)


    On page116 of text book 2009/10, it shows the double entry is
    DR interest payable(finance cost)
    CR Trade and other payables


    I am confused which one is correct?


    Many thanks


    carolyn

    Just realised, thats the mock i sat on friday!
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    Just relised why the heck is it in trade and other payables anyway ??? its a finance cost nothing to do with creditors ?????
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    A-Vic wrote: »
    Just relised why the heck is it in trade and other payables anyway ??? its a finance cost nothing to do with creditors ?????
    because it's money you owe
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    because it's money you owe

    Yeah but its a loan cost not purchase?

    I think you may have to double check your book???
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    its a current liability. the book and past answer say it is
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    messedup89 wrote: »
    its a current liability. the book and past answer say it is

    Yes but loan interest have nothing to do with trade and other payables thats what am saying???
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    Yes but loan interest have nothing to do with trade and other payables thats what am saying???

    accrual
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    A-Vic wrote: »
    Yes but loan interest have nothing to do with trade and other payables thats what am saying???
    The payments of the loan it's self is a non current liability as it is paid over many years.
    However the intrest owed is just for six months so therefore is a current liability and not a non current liability.
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    messedup89 wrote: »
    accrual

    According to their revision pack it is thats what got me confused:-


    Originally Posted by carolyn
    My question is on page 6 of the mock exam from Kaplan.
    In task 1.3, according to further information "interest on the debentures for the last 6 months of the year has not been included in
    the accounts in the trial balance. " , I do a journal which is
    DR interest 1500
    CR interest payable 1500


    The answer provided by Kaplan is
    DR interest 1500
    CR Accrual 1500


    However,I have noticed in all of the past exam papers(Such as task 1.1 of June 2009, task 1.1 of Dec 2008 and task1.1 of June 2008)in my revision pack, the answer is
    DR interest x
    CR interest payable x (which is not included in accrual account)


    On page116 of text book 2009/10, it shows the double entry is
    DR interest payable(finance cost)
    CR Trade and other payables
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    that wasn't in the revision pack. That was taken from the recent mock paper.
    But in the kaplan tuition and revision packs it says accrual.

    Maybe we should ask someone who knows better than us?
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    On page116 of text book 2009/10, it shows the double entry is
    DR interest payable(finance cost)
    CR Trade and other payables

    Check your book again
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    Steve Collins should be able to clear this up for us
  • messedup89
    messedup89 Registered Posts: 1,281 Beyond epic contributor 🧙‍♂️
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    A-Vic wrote: »
    On page116 of text book 2009/10, it shows the double entry is
    DR interest payable(finance cost)
    CR Trade and other payables

    Check your book again

    am at work, cant check my book :(
  • A-Vic
    A-Vic Registered Posts: 6,970 Beyond epic contributor 🧙‍♂️
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    The payments of the loan it's self is a non current liability as it is paid over many years.
    However the intrest owed is just for six months so therefore is a current liability and not a non current liability.

    Agreed but it still has nothing to do with trade and other payables.

    Yes please steve could you clear this up
  • lilac_angel
    lilac_angel Registered Posts: 66 Regular contributor ⭐
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    A-Vic wrote: »
    On page116 of text book 2009/10, it shows the double entry is
    DR interest payable(finance cost)
    CR Trade and other payables

    Check your book again
    My books are Osbourne books and i can't remeber off the top of my head what mine say. but i know that all the AAT past papers say Dr Intrest Cr Intrest Payable
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