Help with Accrual expense

alexnwaalexnwa Posts: 21Registered
Balance as at 1 April 2000 accural for administration expenses £790
The bank summary for the year shows payments for administration expenses of £7190 included in this figure is £2700 for the quatrer ended 31 May 2001

Question
Prepare the administration expenses account for the year 31 march 2001 and close it off by showing the transfer to the statement of profit or loss.

Pleaae, I need solution for the above question. Thanks.

Comments

  • CheesypeesyCheesypeesy Posts: 102MAAT
    £790 accrual brought forward plus admin expenses paid this year of £7,190 = £7,980.

    Two of the months for quarter ended 31 May 2001 relate to April and May, This means we've made a prepayment and need to accrue two months worth of £2,700 to next year. This would be £1,800 (£2,700 divided by three times two).

    The prepayment journal will be Dr Prepayments £1,800, Cr Admin expenses £1,800. This leaves a balance on the account of £6,180, which is transferred to the SPL by Dr SPL £6,180, Cr Admin Expenses £6,180.

    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
  • alexnwaalexnwa Posts: 21Registered
    edited March 19
    @Cheesypeesy thank you.
  • alexnwaalexnwa Posts: 21Registered
    Thank you for your explanation well done. Regarding to SPL figure, Kaplan figure was different from yours. Their figure for SPL was £4600. What kind be the difference?


    Below is Kaplan workings

    Admin expense ledger account

    Debit side
    Bank £7190


    Credit side
    Reversal of accrued expenses £790
    SPL £4600
    Prepaid expenses £1800.

    Could you throw light on the SPL figure, please?
  • CheesypeesyCheesypeesy Posts: 102MAAT
    Ah, I had thought the accrual was a brought-forward expense as opposed to a reduction. So instead the SPL figure is calculated as £7,190 - £790 - £1,800 = £4,600.
    Matthew Dearlove MAAT
    Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.
    alexnwa
  • alexnwaalexnwa Posts: 21Registered
    Thank you for the clarification.
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