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Worked example- Accruals and prepayments in company accounts.
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A worked example of a set of company accounts used to illustrate the effect of Accruals and prepayments on a set of accounts.
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1.Income
Profit costs- 137,000
Opening WIP-20,000
Closing WIP 23,000
140,000
Expenses
General expenses-21,200 – advance payment of 400 = 20,800
Rent and rates 10,000- 1,100 paid in advance = 8,900
Electricity 7000 + 600 accrual = 7600
Depreciation 5,500
Salaries 60,000
Bad debts- 2000
Increased provision for doubtful debts 800
(105,600)
P/L: 34,400
Current assets
WIP 23,000
Cash at bank 15,000
Debtors 30,000
Less doubtful debts (2800)
Less bad debts 2000
64,700
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