Page 384 - F3 -FA Integrated Workbook STUDENT 2018-19

Chapter 24

Chapter 10

Example 1

Accrued and prepaid expenses

Titanium made the following payments during the year ended 30 June 20X5:

(i) Electricity charges
$

1 August 20X4 for three months to 31 July 20X4 3,600
1 November 20X4 for three months to 31 October 20X4 4,200

1 February 20X5 for three months to 31 January 20X5 5,100
1 May 20X5 for three months to 30 April 20X5 4,620

1 August 20X5 for the three months to 31 July 20X5 4,500

At 1 July 20X4 Titanium had an accrual for electricity charges of $2,500.

(ii) Rent of premises

$
1 August 20X4 for three months to 31 October 20X4 6,600

1 November 20X4 for three months to 31 January 20X5 6,600
1 February 20X5 for three months to 30 April 20X5 7,500

1 May 20X5 for three months to 31 July 20X5 9,300
At 1 July 20X4, Titanum had a prepayment for rent paid in advance of
$2,200. The increases in rent during the year were due in part to the
annual negotiation with the landlord and also partly due to renting
additional warehouse space.

Required:

Prepare the ledger accounts for electricity charges and rent of premises
for the year ended 30 June 20X5 to identify the charge to the statement
of profit or loss and the closing accrual or prepayment.

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