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Refer to the Exhibit.
A company is preparing its accounts to 30 April 2006. The latest telephone bill received by the company was dated 31 March and included call charges for the quarter 1 December to 28 February. The amount of the bill for call charges (excluding VAT) was $960. Most of the company's telephone bills are for similar amounts.
Which of the following journal entries should be made to the company's accounts at 30 April 2006?
The journal entries which should be made to the company's accounts at 30 April 2006 is
Suggested Answer: B
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36 comments · newest first
VA
Vallie
11 months ago
Are we sure those call charges are typical? Seems high!
SH
Shay
11 months ago
I think option B makes the most sense here!
SE
Sena
11 months ago
Wait, why are we considering a bill from March for April's accounts?
JE
Jettie
12 months ago
Definitely need to account for that $960.
GL
Glory
12 months ago
The bill was for the quarter ending 28 February.
MA
Margurite
1 year ago
I think the journal entry should reflect the total amount for the quarter, but I'm not confident about the exact accounts to use. I hope I remember the right ones!
HU
Hubert
1 year ago
I feel like the amount of the bill is a bit tricky since it covers a different period. Should we just take the average of the previous bills or something?
AS
Ashton
1 year ago
This question seems similar to one we practiced about recording utility expenses. I think we need to consider the period the expenses relate to, right?
KA
Kanisha
1 year ago
I remember we discussed how to handle accrued expenses in class, but I'm not sure if the bill should be recorded as an accrual or just as an expense.
AG
Agustin
1 year ago
I think the key here is to recognize that the bill covers a period that extends beyond the accounting period. So we'll need to accrue only the portion of the bill that relates to the April 30 accounts. My strategy would be to calculate the daily rate and then prorate it for the number of days in the accounting period.
DO
Dorthy
1 year ago
I'm a bit confused here. Should we be accruing the full $960 bill, or just a portion of it? The question mentions that the bills are usually similar amounts, so I'm not sure if we need to prorate it.
IN
Ines
1 year ago
Okay, let's think this through step-by-step. The bill covers the period from December 1 to February 28, and the accounting period ends on April 30. So we need to figure out how much of that bill should be accrued for the April 30 accounts.
SU
Susy
1 year ago
Hmm, this looks like a tricky one. I'll need to carefully consider the timing of the bill and the accounting period to determine the appropriate journal entry.
WI
Willodean
1 year ago
I've got a good feeling about this one. Checking the dates and making sure the journals are posted should do the trick. Gotta be thorough, but I think we can nail this.
AR
Arthur
1 year ago
This looks like a straightforward capital gains tax question. I'll need to calculate the gain on the sale and see if it qualifies for the exclusion.
JA
Jacqueline
1 year ago
Let's see, if the bill covers December to February, then I need to account for the April portion. *scratches head* Okay, I think I got this.
RI
Rikki
1 year ago
D) Debit Prepayments $320, Credit Telephone Expense $320
ME
Melynda
1 year ago
C) Debit Telephone Expense $320, Credit Prepayments $320
XU
Xuan
1 year ago
B) Debit Accruals $320, Credit Telephone Expense $320
LA
Lashon
1 year ago
D) Debit Accruals $960, Credit Telephone Expense $960
NA
Nada
1 year ago
C) Debit Telephone Expense $960, Credit Accruals $960
ME
Melinda
1 year ago
B) Debit Accruals $320, Credit Telephone Expense $320
EM
Emiko
1 year ago
A) Debit Telephone Expense $320, Credit Accruals $320
AD
Adell
1 year ago
A) Debit Telephone Expense $320, Credit Accruals $320
HI
Hildegarde
2 years ago
Hold on, is this a trick question? I sure hope I don't end up 'accruing' a headache from this one.
AL
Alida
1 year ago
User 2
EL
Elvis
1 year ago
User 1
FR
Frank
2 years ago
Why do you think it's C?
CH
Chantay
2 years ago
Ah, the good old accrual concept strikes again. I better double-check my understanding of that.
PA
Paulina
2 years ago
I believe the correct answer is C.
ST
Stephane
2 years ago
Hmm, this question is tricky. I need to really think about the accounting principles involved here.
NA
Nakita
1 year ago
I'm not sure, but I think option D might be the correct journal entry.
GO
Goldie
1 year ago
I'm leaning towards option C as the correct journal entry.
EL
Elena
1 year ago
I believe option B is the right choice for the journal entry.
ST
Stephaine
1 year ago
I think the correct journal entry should be option A.
FR
Frank
2 years ago
I think the answer is A.