AP1 double entry for accruals and prepayments help?

Question 5.3 (page 22) of Sole trader and partnership accounts workbook.

The question is:

You are working on the accounts of a business for the year ended 31 March 20-2. You can ignore VAT.

You have the following information:

Balances as at: 1 April 20-1
Accrual for selling expenses 400
Prepayment for vehicle expenses 150

The bank summary for the year shows payments for selling expenses of £12,700. Included in this figure is £1,650 for the quarter ended 30 April 20-2.

a) You are to prepare the selling expenses account for the year ended 31 March 20-2 and close it off by showing the transfer to the income statement. Dates are not required.

So I can get the other parts of the question right but not part a. I did this:

CR bal b/d 400
DR Bank 12700
CR Income statement 11450
CR bal c/d 850
Total for both columns: 12700
DR bal b/d 850

BUT in the back of the book the answer is:

CR bal b/d 400
DR Bank 12700
CR Income statement 11750
CR bal c/d 550
Total for both columns: 12700

I'm probably overlooking something very silly because I know the answer looks very similar to mine. I just can't figure out what I'm misunderstanding so can anyone else offer any help? :)

Maybe I just need to take a break :P


  • Carl168
    Carl168 New Member Registered Posts: 10
    Hi please see the attached word document.

    Essentially you calculated the prepayment wrong. As 1 months is prepaid and 3 months in a quarter

    I don't know if the vehicle expenses may have also confused you, but its got nothing to do with the selling expenses and would be a separate expense that would be entered in another account
  • brokenlogic18
    brokenlogic18 New Member Registered Posts: 6
    Ah I see! Thank you very much, I totally overlooked the fact the prepayment was for a quarter and so didn't divide by three. I've been doing this in all my questions and it's the only thing I kept getting wrong. Can't believe I didn't see it now! :p
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