If the financial year is Jan till Dec then would we make
any entry for the telephone bill of Dec, whose invoice/bill
would generate in Jan of next year.
If yes what would be the amount as bill is still not
received and what would be the adjusting entereis. Also how
to rectify the same in next year?
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Answer / vivek bahety
Yes, as the expense belong to dec (last financial year) we have to make a provision on accrual basis n debit the telephone expense and an outstanding expense a/c shall be credited which stand in liability side.
Again in Jan we shall make the payment for the same , here we have to debit the outstanding Expense a/c and credit the cash / bank a/c (the mode of payment).
| Is This Answer Correct ? | 11 Yes | 1 No |
Answer / sajid khan
for the Dec telephone bill made a provision, and debit the
profit and loss account and credit the telephone bill
account.
| Is This Answer Correct ? | 3 Yes | 3 No |
Answer / rabi
Entry would be Telephone Exp. Dr and Telephone Expanses payable Cr. (Telephone Expanses payable should be stand in the group of Current Liblty ) and Next Month in Jan expanses payable will Adjust with cash / bank
| Is This Answer Correct ? | 0 Yes | 0 No |
what is entry in the book in march and april for salary which is paid in april for march month?
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Accounting Questions
Case Study: Deepak Hand tools Private Limited DHPL is a small sized firm manufacturing hand tools. It manufacturing plan is situated in Haryana. The company’s sales in the year ending on 31st March 2007 were Rs.1000 million (Rs.100 crore) on an asset base of Rs.650 million. The net profit of the company was Rs.76 million. The management of the company wants to improve profitability further. The required rate of return of the company is 14 percent. The company is currently considering an investment proposal. One is to expand its manufacturing capacity. The estimated cost of the new equipment is Rs.250 million. It is expected to have an economic life of 10 years. The accountant forecasts that net cash inflows would be Rs.45 million per annum for the first three years, Rs.68 million per annum from year four to year eight and for the remaining two years Rs.30million per annum. The plant can be sold for Rs.55 million at the end of its economic life. The company would need to raise debt to the extent of Rs.200 million. The company has the following options of borrowing Rs.200 million: a. The company can borrow funds from a nationalized bank at the interest rate of 14 percent for 10 years. It will be required to pay equal annual installment of interest and repayment of principal. b. A financial institution has offered to lend money to DHPL at 13.5 per annum but it needs to pay equated quarterly installment of interest and repayment of principal. Questions: 1. Should the company expand its capacity? Show the computation of NPV 2. What is the annual installment of bank loan? 3. Calculate the quarterly installments of the Financial Institution loan 4. Should the company borrow from the bank or from the financial institution?
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