Accruals and prepayments on trial balance.

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I am £500 out on a balance sheet, I cant work it out and its doing my head in! I think it is related to accruals and prepayments. Figures are £1100 accrual for wages (£51300 - £52400 DR) and £600 prepayment for rates (£4030 - £3430 DR). I also decreased the bank by £500 (£5572 - £5072 DR). I adjusted all these figures on the trial balance and transfered them to the profit and loss sheet, and also the balance sheet

Any ideas? Please help!

By the way

Assets - Liabilities = £28966

Capital at year end = £29466

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    how accrual can be DR...?
    DR CR
    Wages 51300
    accrual 1100
    Rate 3430
    Prepayment 600
    Bank 5072
    decreased the bank 500
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    is an accrual not money owed? which needs to be included on the year end. In this example wages of £1100 are owed so would this not increase the wages total on the debit side of the trial balance to £52400?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    or is it classed as a credit, because it is a liability. and prepayment classed as a debit because it is an asset?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    DR CR
    Wages DR 51300
    accrual CR 1100
    Rate DR 3430
    Prepayment DR 600
    Bank DR 5072
    decreased the bank DR 500

    The wages on the year end it should including the accruals for wages on the wages figures but you also need to show the accrual figures in the Accruals A/C as well
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    It means on TB DR Wages for 51300
    On the Balance Sheet
    Current liability
    Accruals
    Wages 1100
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    sorry to go on, but, would the bank not be changed due to an accrual? you have been very helpful, thanks.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    forget the last question. it makes sense now. thanks
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Accruals and prepayments on trial balance.

    What do you mean..?
    Bank usualy pay out for something(I do not know what is in this case)but nothing do with accruals
    you only decrease bank and incease something that been paid for (an Exp)
    and your bank DR anyway.
    Bank DR 5072
    Decrease bank (any Exp)DR 500 on the TB
    On the balance Sheet
    Current assets
    bank 5072

Categories

Privacy Policy