Expenses Ledger Account - Where do the figures come from?
charlotte_rahman
Registered Posts: 5
Hi, I am struggling with the following question and would really appreciate it if someone could explain to me where the SPL figure and the Balance c/d figure come from. (It is question 12 of ACPR Revision Kit)
You are given the following information:
Accrual for administration expenses £790
The bank summary for the year shows payments for administration expenses of £7,190. Included in this figure is £2,700 for the quarter ended 31 May20x1.
Prepare the administration expense account for the year ended 31 March 20x1 and close it off by showing the transfer to the statement of profit or loss.
The answer is:
Administration expenses account
(Debit side)
Bank 7190
(Credit side)
Balance b/d 790
SPL 4600
Balance c/d 1800
If this question has been answered before please post the link for me.
Thanks !
You are given the following information:
Accrual for administration expenses £790
The bank summary for the year shows payments for administration expenses of £7,190. Included in this figure is £2,700 for the quarter ended 31 May20x1.
Prepare the administration expense account for the year ended 31 March 20x1 and close it off by showing the transfer to the statement of profit or loss.
The answer is:
Administration expenses account
(Debit side)
Bank 7190
(Credit side)
Balance b/d 790
SPL 4600
Balance c/d 1800
If this question has been answered before please post the link for me.
Thanks !
0
Comments
-
I'm not familiar with the ACPR Revision Kit but have been revising for this exam later today and seen a question very similar.
The balance c/d 1800 is a prepaid expense, where for the quarter ending 31-May-20x1 the March amount is 900 and the prepaid April and May amount is 1800 as a reduction in expense in the current year.
So the Bank debit balance 7190 minus your 790 accrual b/d and minus the 1800 prepayment c/d = 4600 which would be transferred to the Statement of Profit or Loss.
I've got a few of these wrong where I couldn't determine if it was an accrual or prepayment from the wording in the question so hope I'm not misleading you.5 -
Adele69 is correct.
You could also look at it like this:
..........................DR................................CR
..............................................................790 Opening accrual
Bank ................7190............................4600 Balancing figure
.............................................................1800 c/d
____________________________________________
..........................7190...........................7190
____________________________________________
Prepayment b/d 1800
5 -
Thanks for the help! I understand it now. Much appreciated!0
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