At 1 June 2018, Madhavi's telephone expense account showed a prepayment of £250. During the financial year ended 31 May 2019, Madhavi paid £3,400 for all her telephone calls and line rental. At 31 May 2019, Madhavi had an accrual for telephone expenses of £400. What is the figure that will appear in Madhavi's trial balance for her telephone expense at 31 May 2019?

Question

Quizplus · Accepted Answer

The total telephone expense for the year is calculated by taking the amount paid (£3,400), adding the accrual at the end of the year (£400), and subtracting the prepayment at the beginning of the year (£250). This results in £3,400 + £400 - £250 = £3,550. However, the correct figure that will appear in the trial balance is the total expense incurred during the year, which is £3,400 (paid) + £400 (accrual) = £3,800. Since this option is not available, the closest correct calculation based on the given options is £4,050, which accounts for the total expenses including the prepayment adjustment.

At 1 June 2018, Madhavi's Telephone Expense Account Showed a Prepayment