Worksheet
Chapter 1 Accruals and prepayments (應計與預付項目)
1.3 Accruals (應計項目)
1.3.1 Accrued expenses (應計費用)
Class work 1
1. Prepare the following ledger accounts and show the amounts transferred to the profit and loss account
on 31 December 2008.
(ii) Electricity: a balance of $6,480 at year end but an amount of $1,560 remained unpaid.
Electricity
2008 $ 2008 $
Dec 31 Balance b/f 6,480 Dec 31 Profit and loss 8,040
“ 31 Accrued c/f 1,560
8,040 8,040
2009
Jan 1 Accrued b/f 1,560
1.3.2 Accrued revenues (應計收益)
Class work 2
1. Prepare the following ledger accounts and show the amounts transferred to the profit and loss account
on 31 December 2008.
(ii) C Ho received commissions of $1,280 and $1,400 in cash on 30 July 2008 and 2 October 2008
respectively. Commissions of $1,360 for the two months from 1 November 2008 to 31 December
2008 were received on 10 January 2009.
Commission Revenue
2008 $ 2008 $
Dec 31 Profit and loss 4,040 July 30 Cash 1,280
Oct 2 Cash 1,400
Dec 31 Accrued c/f 1,360
2009 4,040 4,040
Jan 1 Accrued b/f 1,360
1
1.4 Prepayments (預付項目)
1.4.1 Prepaid expenses (預付費用)
Class work 3
1. Prepare the following ledger accounts and show the amounts transferred to the profit and loss account
on 31 December 2008.
(ii) C Ho bought stationery of $3,000 and $2,800 in cash on 10 May 2008 and 24 September 2008
respectively. At the end of the year, there was unused stationery costing $800 and will be used as
prepaid expenses.
Stationery
2008 $ 2008 $
May 10 Cash 3,000 Dec 31 Profit and loss 5,000
Sep 24 Cash 2,800 “ 31 Prepaid c/f 800
5,800 5,800
2009
Jan 1 Prepaid b/f 800
1.4.2 Unearned revenues (未獲收益)
Class work 4
1. Prepare the following ledger accounts and show the amounts transferred to the profit and loss account
on 31 December 2008.
(ii) Commission income: a balance of $200,000 at year end but some commission income of $12,000
received for the month of January 2009 was included in the commission income account.
Commission Income
2008 $ 2008 $
Dec 31 Profit and loss 188,000 Dec 31 Balance b/f 200,000
“ 31 Prepaid c/f 12,000
200,000 200,000
2009
Jan 1 Prepaid b/f 12,000
2
1.5 Presentation of accruals and prepayments in financial statements
Class work 5
2.
Trial Balance as at 30 June 2009
Dr Cr
$ $
Office furniture 10,800
Equipment 25,400
Accounts receivable 11,100
Bank 8,090
Cash in hand 120
Fees charged 108,600
Wages and salaries 31,960
Postage and stationery 2,140
Telephone 1,250
Computer operating expenses 2,190
Travel expenses 1,620
Insurance 890
Rent 23,000
Sundry expenses 520
Drawings 9,200
Capital 19,680
128,280 128,280
Additional information: (i) Items prepaid: rent $600, insurance $170.
(ii) Accruals: stationery $220, wages $2,320.
(iii) 10% of travel expenses were used for T Lee’s private purposes.
Draw up an income statement for the year ended 31 December 2009 and a balance sheet as at that date.
Income Statement for the year ended 30 June 2009
$ $
Fees charged 108,600
Less Expenses:
Wages and salaries ($31,960 + $2,320) 34,280
Postage and stationery ($2,140 + $220) 2,360
Telephone 1,250
Computer operating expenses 2,190
Travel expenses ($1,620 x 90%) 1,458
Insurance ($890 $170) 720
Rent ($23,000 $600) 22,400
Sundry expenses 520 (65,178)
Net profit 43,422
3
Balance sheet as at 30 June 2009
$ $
Non-current assets
Office furniture 10,800
Equipment 25,400
36,200
Current assets
Accounts receivable 11,100
Prepaid expense ($600 + $170) 770
Bank 8,090
Cash 120
20,080
Less Current liabilities
Accrued expenses ($220 + $2,320) (2,540)
Net current assets 17,540
53,740
Capital
Balance as at 1 July 2008 19,680
Add Net profit for the year 43,422
63,102
Less Drawings ($9200 + $1620 x 10%) (9,362)
53,740
4
1.5 Alternative method (處理應計與預付項目的另一方法)
Class work 6
2. For each of the independent situations described below, prepare journal entries. Narrations are not
required.
(i) Rental income of $4,355 represented the amount received for sub-letting part of the office
premises for 13 months from 1 January 2011 to 31 January 2012.
(ii) An insurance premium of $2,190 was prepaid for the three months ended 31 March 2012.
(iii) Accrued rental expenses of $5,210 and prepaid insurance expenses of $2,100.
(iv) As at 30 April 2010, prepaid repair costs and accrued rent revenue amounted to $210 and $1,700,
respectively.
(v) General expenses: paid $6,150 by cheque during the year, of which $560 was related to April next
accounting year.
Journal
Details Dr Cr
$ $
(i) Rental income ($4,355 x 1/13) 335
Unearned revenue 335
(ii) Prepaid expenses 2,190
Insurance 2,190
(iii) Rental expenses 5,210
Accrued rental expenses 5,210
Prepaid insurance expenses 2,100
Insurance expenses 2,100
(iv) Prepaid expenses 210
Repair costs 210
Accrued revenue 1,700
Rent revenue 1,700
(v) General expenses 6,150
Bank 6,150
Prepaid general expenses 560
General expenses 560