- 10 Marks
FA – L1 – Q36 – Accruals and prepayments
Write up water expense ledger accounts for 20X8 and 20X9 under different payment scenarios.
Question
Kieran started a business on 1 January 20X8.
Accounting year ended 31 December 20X8:
A new warehouse was acquired on 31 March 20X8. On 21 April 20X8, Kieran received a water bill demand for GH₵1,000,000 for the 12 months to 31 March 20X9. Payment was made, in full, on 30 April 20X8.
Accounting year ended 31 December 20X9:
An office extension was built. The water bill demand for the 12 months to 31 March 20Y0 was GH₵1,600,000. Kieran paid the full amount on 1 June 20X9.
Required:
(a) Write up the water expense ledger account for 20X8 and for 20X9.
(b) Assuming now that payments were made annually in arrears (i.e. GH₵1,000,000 on 31 March 20X9 and GH₵1,600,000 on 31 March 20Y0), write up the water expense ledger account for each of the two accounting years.
Find Related Questions by Tags, levels, etc.
- Tags: Accruals, Financial Adjustments, Ledger accounts, Prepayments, Water Expense
- Level: Level 1
- Topic: Accruals and prepayments
