Accruals and prepayments
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KAPLAN PUBLISHING
Illustration 3 – Accrued income
A business earns bank interest income of $300 per month. $3,000 bank
interest income has been received in the year to 31 December 20X5.
What is the year-end asset and what is the bank interest income
for the year?
Show the relevant entries in the ledger accounts.
Solution to Illustration 3
•
The total amount credited to the statement of profit or loss in
respect of interest should be $3,600 (12 × $300).
•
The year-end accrued income asset is the $600 that has not yet
been received.
The accounting entries required are:
Dr Accrued income (SFP) $600
Cr Bank interest income (P/L) $600
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