VCE Accounting Unit 3

1. 14.7
SUMMARY OF PREPAID
AND ACCRUED EXPENSES

2. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 At the start of the period a firm had prepaid wages of $2,000
 During the period, payments for wages were $50,000
 At the end of the period, prepaid wages were $3,000
14.7 SUMMARY OF PREPAID AND
ACCRUED EXPENSES
Period
Prepaid
$2,000
Prepaid
$3,000
Paid
$50,000
Balance Sheet at end of period
Current Assets
Prepaid wages 3,000
Income Statement for period
Other Expenses
Wages 49,000
Cash Flow Statement for period
Operating Activities
Wages paid
Prepaid wages
(47,000)
(3,000)
• Expenses prepaid last period $2,000
• Expenses paid for this period $47,000
• $50,000 total paid
• $3,000 of this was prepaid for next period

3. © Michael Allison, Trinity Grammar School.
Author’s permission required for external use
 At the start of the period a firm had accrued insurance of $4,000
 During the period, payments for insurance were $30,000
 At the end of the period, accrued insurance was $3,000
Accrued
$4,000
Accrued
$3,000
Paid
$30,000
Balance Sheet at end of period
Current Liabilities
Accrued insurance 3,000
Income Statement for period
Other Expenses
Insurance 29,000
Cash Flow Statement for period
Operating Activities
Insurance paid
Accrued insurance
paid
(26,000)
(4,000)
14.7 SUMMARY OF PREPAID AND
ACCRUED EXPENSES
• Expenses paid for this period $26,000
• $30,000 total paid
• $4,000 of this was used to pay off accrued expenses
from last period
• Accrued expenses for this period $3,000
Period