| |
|
Prepaid
and Accrued Expenses Practice
|
|
|
|
| |
|
|
| |
1)
|
The company has a loan for £50,000
to be paid back in 8 years.
|
|
| |
|
The rate of interest is 8% per year.
|
|
| |
|
|
| |
|
In the trial balance:
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
|
Loan Interest
|
|
3,000
|
|
|
| |
|
|
| |
|
There are 3 months loan interest
owing, to be accrued.
|
|
| |
|
|
| |
|
|
| |
a)
|
What is the loan interest expense
for the income statement?
|
|
|
| |
|
|
|
| |
b)
|
How much is to be entered in the
balance sheet?
|
|
|
| |
|
|
|
| |
c)
|
In which section of the balance
sheet should your answer to b) go?
|
|
|
| |
|
|
| |
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
2)
|
The owner took extra goods for his
own use, valued:
|
500
|
pounds.
|
| |
|
|
| |
|
In the trial balance:
|
|
| |
|
|
|
DR
|
CR
|
|
| |
|
|
Purchases
|
12500
|
|
|
| |
|
|
Drawings
|
250
|
|
|
| |
|
|
Returns In
|
150
|
|
|
| |
|
|
Returns Out
|
|
400
|
|
| |
|
|
Carriage In
|
900
|
|
|
| |
|
|
Sales
|
|
34000
|
|
| |
|
|
Inventory
|
1600
|
|
|
| |
|
|
| |
|
The closing inventory
is
|
2300
|
|
| |
|
|
|
|
|
| |
a)
|
What is the Gross Profit?
|
|
|
|
|
|
| |
|
|
|
|
|
| |
b)
|
What is the Drawings for the balance
sheet?
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
3)
|
In the trial balance:
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
|
Wages
|
|
24,500
|
|
|
| |
|
|
| |
|
There are wages owing, to be
accrued:
|
£5,000
|
pounds.
|
|
| |
|
|
| |
a)
|
What is the wages expense for the
income statement?
|
|
|
| |
|
|
|
| |
b)
|
How much is to be entered in the
balance sheet?
|
|
|
| |
|
|
|
| |
c)
|
In which section of the balance
sheet should your answer to b)
go?
|
|
|
| |
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
4)
|
In the trial balance:
|
|
| |
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
Vehicles
|
|
|
35,000
|
|
|
| |
|
Accumulated
Depreciation (Vehicles)
|
|
|
7000
|
|
| |
|
|
|
|
|
|
|
|
| |
|
The depreciation is to be calculated
using reducing balance at 6%
|
|
|
| |
|
|
|
|
|
|
|
|
| |
a)
|
What is the depreciation expense in
the income statement?
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
b)
|
What is the accumulated depreciation
for the balance sheet?
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
5)
|
In the trial balance:
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
|
Insurance
|
|
3,500
|
|
|
| |
|
|
| |
|
The insurance has been pre-paid by
|
£600
|
pounds.
|
|
| |
|
|
| |
a)
|
What is the insurance expense for
the income statement?
|
|
|
| |
|
|
| |
b)
|
How much is to be entered in the
balance sheet?
|
|
|
| |
|
|
| |
c)
|
In which section of the balance
sheet should your answer to b)
go?
|
|
|
| |
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
6)
|
In the trial balance:
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
|
Electricity
|
|
5,600
|
|
|
| |
|
|
| |
|
There is an amount owing on the
electricity bill:
|
£560
|
pounds to be accrued.
|
| |
|
|
| |
a)
|
What is the electricity expense for
the income statement?
|
|
|
| |
|
|
|
| |
b)
|
How much is to be entered in the
balance sheet?
|
|
|
| |
|
|
| |
c)
|
In which section of the balance
sheet should your answer to b)
go?
|
|
|
| |
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
| |
7)
|
In the trial balance:
|
|
| |
|
|
|
|
DR
|
CR
|
|
| |
|
|
Bad Debts
|
|
430
|
|
|
| |
|
|
Accounts
Receivable
|
12500
|
|
|
| |
|
|
Allowance
for doubtful Debts
|
|
2000
|
|
| |
|
|
| |
|
|
| |
|
We now learn that a customer
included in accounts receivable has gone bankrupt.
|
| |
|
This customer now will not pay.
|
The customer owed:
|
£180
|
|
| |
|
The allowance for doubtful debts is
set at 3% of debtors.
|
|
| |
|
|
| |
a)
|
What is the Bad Debts figure for
this year's financial statements?
|
|
|
| |
|
|
| |
b)
|
In which section of the income
statement does bad debts go?
|
|
|
| |
|
|
| |
c)
|
What is the accounts receivable for
this year?
|
|
|
| |
|
|
| |
d)
|
What is the allowance for doubtful
debts required this year?
|
|
|
| |
|
|
| |
e)
|
What is the value needed for the
income statement?
|
|
|
| |
|
|
| |
f)
|
Where in the income statement should
your answer to e) go?
|
|
|