AP1 Question

Neney
Neney New MemberRegistered Posts: 8
Hi everyone, I have my AP1 exam today but I am stuck on this particular question. I would be grateful if anyone could help with this question and explain how the get the answer. Thanking you in advance.


Section 2 – Extending the trial balance using accounting adjustments

Task 2.1

This task is about accounting for accruals and prepayments and preparing a trial balance.

You are working on the final accounts of a business for the year ended 31 March 20X1. In this task, you can ignore VAT.

You have the following information:

Balances as at: 1 April 20X0
£
Accrual for administration expenses 790
Prepayment for selling expenses 375

The bank summary for the year shows payments for administration expenses of £6190. Included in this figure is £1800 for the quarter ended 31 May 20X1.

(a) Prepare the administration expenses account for the year ended 31 March 20X1 and close it off by showing the transfer to the profit and loss account

Administration expenses
£ £






The bank summary for the year shows payments for selling expenses of £7900. In April 20X1, £825 was paid for selling expenses incurred in March 20X1.

(b) Prepare the selling expenses account for the year ended 31 March 20X1 and close it off by showing the transfer to the profit and loss account. Include dates.

Selling expenses
£ £

Comments

  • sdv
    sdv Experienced Mentor Registered Posts: 585
    Accruals and prepayments
    Neney wrote: »
    Hi everyone, I have my AP1 exam today but I am stuck on this particular question. I would be grateful if anyone could help with this question and explain how the get the answer. Thanking you in advance.


    Section 2 – Extending the trial balance using accounting adjustments

    Task 2.1

    This task is about accounting for accruals and prepayments and preparing a trial balance.

    You are working on the final accounts of a business for the year ended 31 March 20X1. In this task, you can ignore VAT.

    You have the following information:

    Balances as at: 1 April 20X0
    £
    Accrual for administration expenses 790
    Prepayment for selling expenses 375

    The bank summary for the year shows payments for administration expenses of £6190. Included in this figure is £1800 for the quarter ended 31 May 20X1.

    (a) Prepare the administration expenses account for the year ended 31 March 20X1 and close it off by showing the transfer to the profit and loss account

    £1800 for a quarter = £ 600 for each month for March,April, May = Prepayments for Month of April / may

    Administration expenses
    ...............................................................£.............£
    Bal b/f (Accruals from last year)......................................790
    Bank payments.............................................6190
    bal c/d (Prepayment this year).......................................1200
    Profit & Loss..................................................................4200

    total............................................................6190.........6190
    bal b/d........................................................1200


    The bank summary for the year shows payments for selling expenses of £7900. In April 20X1, £825 was paid for selling expenses incurred in March 20X1.

    (b) Prepare the selling expenses account for the year ended 31 March 20X1 and close it off by showing the transfer to the profit and loss account. Include dates.

    Selling expenses
    ...............................................................................£........................£
    Balance b/d prepayment..................................................... 375
    bank payment ..................................................................7900
    Bal c/d (Accruals)................................................................825
    Profit & loss..................................................................................................9100
    Total................................................................................9100.....................9100
    bal b/d...........................................................................................................825


    ......
  • mrb82
    mrb82 Well-Known Registered Posts: 147
    As a quick answer, you'll have your balances in the trial balance, then the accruals and prepayments will be in the adjustments colum. If it's an accrual, you still owe it, so it will increase the balance on the account in the P&L, if it's a prepayment, you will be reducing the balance in the P&L (for expenses anyway).

    Hope this helps, as I say, it's just a quick answer!
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    Did you pass?...
    Did you think it was easy/hard anything like any of the mocks you did?

    lol sorry for all the questions I have mine very soon!
  • mrb82
    mrb82 Well-Known Registered Posts: 147
    Clarekaye wrote: »
    Did you pass?...
    Did you think it was easy/hard anything like any of the mocks you did?

    lol sorry for all the questions I have mine very soon!

    This ^ Mine's at the start of Feb so want to know if it's hard!
  • MarkT
    MarkT Trusted Regular Registered Posts: 302
    Clarekaye wrote: »
    Did you pass?...
    Did you think it was easy/hard anything like any of the mocks you did?

    lol sorry for all the questions I have mine very soon!

    I just sat my AP1 this morning and to a certain degree, found that the mock CBA on this site mirrored the exam.

    The trick is to take your time and read the questions. They threw a few items in adjustments that were misleading and had no effect on the cash book :)
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    Mark,
    Could you do me a huge favour and point me in the direction of the ap1 mock exam on here :-/
  • Diddy Mau
    Diddy Mau Well-Known Registered Posts: 238
    Hi Clarekaye
    this soudl take you there
    https://www.aat.org.uk/myaat/pa_lsb/
    under My AAT, computer based assesments, practice assesments
  • Clarekaye
    Clarekaye Trusted Regular Registered Posts: 307
    The thing keeps crashing, not going onto next or going back argh why did I not know these existed till 2 days before my exam :-(
    Is an accrued expense a credit on the P&L?
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