Dfs accrual

NAJC

Sorry being a bit thick and panicking before the exam tomorrow ..

How would you recognise this as an accrual when doing journal entrys?

The y/e was 31 october 2009
The company hired vehicles to distribute finished goods locally. It was able to negotiate a deal with a
local company for the period 1 September to 30 November 2009 at a cost of £99,000. This was
invoiced on 6 November 2009 and paid, in full, on 1 December 2009. No entry has been made in the
accounts.

taskey

NAJC wrote: »

Sorry being a bit thick and panicking before the exam tomorrow ..

How would you recognise this as an accrual when doing journal entrys?

The y/e was 31 october 2009
The company hired vehicles to distribute finished goods locally. It was able to negotiate a deal with a
local company for the period 1 September to 30 November 2009 at a cost of £99,000. This was
invoiced on 6 November 2009 and paid, in full, on 1 December 2009. No entry has been made in the
accounts.

distribution costs d 66
accrual c 66

99/3*2 in effect 2 months need to be accounted for in this period (sep and oct) and 1 month will be accounted for in the next period (nov)

Tracy

Esme

Dr Distribution costs 99,000 x 2/3 = 66,000
Cr Accruals 66,000

Tinkerbell007

Hi

Do you mean know that it is an accrual that has to be done or how you actually put the journal down?

If the item hasn't been paid for before the end of the reporting period then you need to accrue for the relevant part of the costs.

The double entry is DR the expense and CR accruals (easy to remember with the CR in acCRuals!!!)

Does that help??

NAJC

thankyouuu.

It did help alot thanks . Thankyou everyone.
I knew the double entry for it just when to recognise it as an accrual. Thankyou for the explanations.