By S. Hall and N. Skene Smith (Auth.)
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Extra info for Accounting Principles and Practice
260 20 £280 July 1 „ Provisions b/d 180 Notes: 1. A. Rose owed £210. He paid £140 and consequently the amount written off was £70. This is not affected by the FINAL ACCOUNTS 41 provision brought forward, £105 of which related specifically to A. Rose. 2. Details of the calculations of the provisions are not included in the accounts where they would only serve to mislead. Once the provisions have been determined, the make-up of the figures does not affect the subsequent accounting. Sometimes a separate Provision for Bad Debts Account is opened.
By P. & L. A/c £1,200 1,200 £1,200 1963 Jan. 1 By Amount Accrued b/d 300 The true annual rent is charged in the Profit & Loss Account and the credit balance must be included in the Balance Sheet as a liabiUty. " A debit balance is carried forward as a prepayment. Dr. 1961 Api. Insurance Account £ 1961 1 To Cash, Fire Insce. Sept. 30 Year to 31st March 1962 60 £60 Oct. 1 To Amount Prepaid b/d 30 Cr. £ By Amount Prepaid c/d „ P. «& L. A/c 30 30 £60 36 A C C O U N T I N G P R I N C I P L E S AND P R A C T I C E The correct charge for the half year is made in the Profit & Loss Account and in the Balance Sheet there is entered an asset: Prepayment £30.
A/c 30 30 £60 36 A C C O U N T I N G P R I N C I P L E S AND P R A C T I C E The correct charge for the half year is made in the Profit & Loss Account and in the Balance Sheet there is entered an asset: Prepayment £30. EXAMPLE 9 Write up the Rent, Rates and Insurance Account for the year ended 31st December, 1962 from the following information: On 1st January, 1962 the rent for the quarter to 31st December, 1961 was owing. The Rates for the year to 31st March, 1962 amounted to £88 and had been paid in October, 1961.