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[Ravinee B]

Hi, Ravinee B,

Post here your answer and workings of Shargeel's question

well we do
working
bal b/d is 4327 and all cash payments is 21213.39 thus the difference between the is 16886.39 then this is the bal c/d of accruals

[Tammi]

I don't know the answer, I just calculated it myself.

From the question I found out that the company pays its bills or whatever in January, April, July, October, so that's why it had two months' accrual. now, my workings:
Debit side:
Cash 6,491.52
Cash 5,400.93
Cash 4,700.94
Cash 4,620.00
c/d 3,080 (W1)
24,293.39

Credit side:
b/d 4327.68
IS 19,965.71
24,293.39

W1. the figure of the last 2 months (November, December) was not given in the question. In such questions you should think that the figure remained the same as it was in the previous months. So for the last months the bills remained 4,620.00, but you should caclulate only for 2 months and this stands for 3 months:
4,620.00 x 2/3 = 3,080

Hence the answers are:
1. Accrual b/f - 3,080
2. Income statement charge - 19,965.71

Hope this will help

[yokeyin]

HI Shargeel,

I tried the question but not sure my answer is correct. Here is my workings.

The accounting period is 1st Jan 20X1 till 31st Dec 20X1.


31.1.20x1 - for the period ( Feb - Apr) = 6491.52
30.4.20x1 - for the period ( May - July) = 5400.93
31.7.20x1 - for the period (Aug - Oct) = 4700.94
31.10.20x1 - for the period (Nov - Jan) = 4620.00 x 2/3 = 3080

Total amount show in Income statement = RM19673.39
Total amount show in Balance Sheet = 4620 x 1/3 = RM1540

Anyone can correct me if I'm wrong?

Cheers...

[Tammi]

Hi, yokeyin,

Why have you done these calculations:
4620 x 1/3 = RM1540

I think that it was accrual and not prepayment, if it were prepayment then your working would be correct.

The question states that the company has not paid for the last 2 months and it will pay it in January, so it can not be prepayment. And the question is also:
Calculate The Amount Of Accrual C/d.

[adgunny]

Hi, I agree with you tammi, the accrual c/d is $3,080.
but i think the amount in the income statement should be $18425.71
(19,965.71 -1540) as 1540 is the prepayment at end.Please let me know if im right or wrong.
thnx.

[Acid]

Hi

If prepayment is at the year-end then right you are right to subtract it.

Regards

[Tammi]

Hi,
There was no prepayment!