Accruals

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Can someone please give some advice on Accruals.

I know how much to write off to the P & L but am unable to get the T Account to balance.

During the year X8 electricity was used as follows:

Balance on Account 01/01 300 Cr
Feb pay for electric consumed to 31/01 900
May pay for electric consumed to 30/04 820
Aug pay for electric consumed to 31/07 690
Nov pay for electric consumed to 31/10 550
Electricity consumed Nov Dec 390

I make the P & L for X8 2750



Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    What date is the year end?

    Scott.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    the year end is 31 Dec X8
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Are you sure you've got the correct amount for Nov & Dec? Because it's less than for the other months, but a longer period?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Thats what the question says

    The other payments are for a quater
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Sorry, my mistake, I misread it.
    What are trying to balance? Isn't it just a case of taking the £2,750 to the P&L? Then it balances.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    This is what I have in my T account
    On the Debit side
    Bank 900
    Bank 820
    Bank 690
    Bank 550
    Accrued 390 Total 3350

    On the Credit side
    Accrual b/d 300

    then I have 600 of the first 900 paid as an accraul for previous year,as this covers Nov & Dec X7 and Jan X8 when you balance it it only leaves 2450 for the P & L?



    I know it should be 2750
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Shouldn't the brought forward accrual be £600? Ie the £600 for last November and December? I think you are bringing forward an extra £300 as last year's accruals that you shouldn't be. If that makes sense, that will give you your £2,750.
    If that's not the problem, let me know and i'll have another think about it.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Hi Kate

    Yes that's what I thought, but in the question it gives you a balance on the electricity account 1 January of 300(Cr)this is the 300 that's causing the problem.

    My tutor has told us that an accrual b/d is a credit.

    Am I not understanding the question? :?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    It's been a while since I did accruals, but this is what I got...

    taccount.png
    That 300 b/d looks a bit odd to me, it seems that £600 of leccy was used in January which doesn't seem that likely. Are you sure there's not a mistake in the question? An accrual of £600 would make a lot more sense as well as giving you your 2,750.

    Chris
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    of the payment made Feb X8 for 900, 600 relates to the previous accounting period as this covers Nov Dec & 300 for Jan X8

    Confused? I am
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    I reckon it's a typing error. I really think that the brought forward credit should be £600. Is this question in a book? A book we might have?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    No a sheet from my tutor it's question 7.5 Prepac Ltd

    if thats any help

    thanks
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    Is there any way you can email your tutor to ask her? I would make sure that your P & L expected figure is correct though first. As in, just check your calculations first, before suggesting that they made a mistake (they wont appreciate it if you're wrong). Or is there anyone else you know in your class you could ask? I think it is an error though.
    Hope you get it all sorted :)
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    I have taken it to work to show my Manager and we both came out with the same figure for the P & L. My study buddy is as confused as me lol :lol:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals

    I think you should just assume it's a typing error and move on. There's no point wasting time on something that you are learning nothing from. You have done it correctly, and understand it. Sounds like everything else is correct too, so even if there's some small mistake you have made, you will get most of the marks anyway. No point stressing. :)
    Hope you get a good mark for it.

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