AP1 double entry for accruals and prepayments help?
brokenlogic18
Registered Posts: 6 Regular contributor ⭐
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
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
0
Comments
-
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 account0 -
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!0
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