Accruals

LaylaAmanda
LaylaAmanda Registered Posts: 1
You are preparing the year-end accounts for March 20-7. You have the following information regarding administrative expenses.
There was an accrual of £750 made in 31 March 20-6, which has now reversed. The cashbook for the year shows administration costs of £25,645. You have a bill of administrative expenses showing a total cost of
£3,300 for the quarter ending 30 April 20-7. This was received and paid for after the year-end.
(e) Complete the following statement:
The administrative account needs an adjustment for prepaid expenses / accrued expenses / prepaid income / accrued income dated 31 March 20-6 / 31 March 20-7 / 30 April 20-7
for £

Comments

  • Pian32
    Pian32 Registered Posts: 474 Dedicated contributor 🦉
    So an accural for the March -6 YE was made and reversed - no action needed by you. The cash book entry is again irrelevant for this question (I assume it was needed in another part)

    That means we're left with the admin bill of £3,300 running up to 30 April -7. As this was received after the YE you need to accrue the relevant expense and that would be dated at the year end. You work this out be adjusting for the months the bill covers in the year (2/3).

    'The administrative account needs an adjustment for accrued expenses dated 31 March 20-7 for £2,200
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