10-02-2009, 02:18 AM
this question is of topic "accounting from incomplete records"
a started business on 1st january 1991 with a capital of rs.5000, he did not keep any books of accounts beyond a cash book, a sumary of which for the year ending 31st december,1991 is given below.
receipts from sundry debtors rs.6500 cash sales rs.3500 commission rs.250
payments to sundry creditors rs.7850 cash purchase rs4500 trade expenses rs.1250 furniture rs.100 war charity rs.50
on 31st dececmber following information is also available.
credit sales rs.12000 credit purchase rs10200, <b>expenses owing rs.150 and prepaid expenses rs. 75</b>
other adjustments are
10% depreciation on furniture
writing off rs. 500 as bad debts
stock in hand rs.2250
here i need 2 issues to be sorted out 1st one is about prepaid expenses rs.75 and expenses owing rs.150.
if i am not wrong than "expenses owing" are accrued expenses, expenses payable . the entry should be expenses debit by rs.150 and accrued expenses credit by rs.150 and these expenses should be mentioned in income statement to adjust with revenue of this year.
2nd thing prepaid expenses rs.75, entry for these will be.. prepaid expenses debit by rs.75 and cash/bank credit by 75, as there is not mentioned that these prepaid expenses are consumed or not..if i treat these as asset than i might not put these in the income statement if i put it in income statement as an expense than i shuld not mention it in balance sheet as prepaid expense "am i right"?
dont know much about accounting need a little help thankyou.. assalamualykum
a started business on 1st january 1991 with a capital of rs.5000, he did not keep any books of accounts beyond a cash book, a sumary of which for the year ending 31st december,1991 is given below.
receipts from sundry debtors rs.6500 cash sales rs.3500 commission rs.250
payments to sundry creditors rs.7850 cash purchase rs4500 trade expenses rs.1250 furniture rs.100 war charity rs.50
on 31st dececmber following information is also available.
credit sales rs.12000 credit purchase rs10200, <b>expenses owing rs.150 and prepaid expenses rs. 75</b>
other adjustments are
10% depreciation on furniture
writing off rs. 500 as bad debts
stock in hand rs.2250
here i need 2 issues to be sorted out 1st one is about prepaid expenses rs.75 and expenses owing rs.150.
if i am not wrong than "expenses owing" are accrued expenses, expenses payable . the entry should be expenses debit by rs.150 and accrued expenses credit by rs.150 and these expenses should be mentioned in income statement to adjust with revenue of this year.
2nd thing prepaid expenses rs.75, entry for these will be.. prepaid expenses debit by rs.75 and cash/bank credit by 75, as there is not mentioned that these prepaid expenses are consumed or not..if i treat these as asset than i might not put these in the income statement if i put it in income statement as an expense than i shuld not mention it in balance sheet as prepaid expense "am i right"?
dont know much about accounting need a little help thankyou.. assalamualykum
