After going through the notes, try the following FOUR(4) questions.

Submit your answer as a file attachment.

Question 1:

Calculating the amount to accrue

• Griss year-end is 31 December. Electricity is billed and paid for quarterly in arrears.
• On 14 December 2014, the electricity bill comes in and is paid on 17 December.
• The amount of the bill is 300.00.
• On 14 March 2015, another bill comes in for 330.00

How should this be accounted for in the books of Gris?

Question 2:

Estimating the accrual, where no invoice is available

• Blancos year end is 31 December. Electricity is billed and paid for quarterly in arrears.
• On 14 December 2014, the electricity bill comes in and is paid on 17 December 2014.
• The amount of the bill is 300.00.
• Blanco needs their financial statements finalised by 28 February 2015. The accountant does not have the details of the second invoice.

How should this be accounted for in the books of Gris?

Question 3:

Income accrual

• Amys year end is 31 December
• Amy has surplus office space which she lets for 600 per month.
• By 31 December the December months rent had not been received.

How will this missing income be accounted for in the books of Amy?

Question 4:

Prepayment of expenses (determining the amount to prepay)

• Morgan pays maintenance for the support and upkeep of its computers once a year in advance on 30 June.
• The bill for 30 June 2013 to 30 June 2014 is 500
• The bill for 30 June 2014 to 30 June 2015 is 600

Morgans year-end is 31 December 2014.

What is the correct charge that should appear in the income statement for the year ended 31 December 2014?