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Accounting question

  • 12-05-2012 2:04pm
    #1
    CookieMonster.x
    Registered Users Posts: 1,049 ✭✭✭


    Just wondering if anyone could explain this to me. I'm doing 2010 q1 which is a sole trader. One of the adjustments is 'the advertising payment is towards a 24 month campaign which began on 1/10/2009.' the figure in the trial balance is €2400. The answer is €300 in profit and loss and €2100 in balance sheet.
    Can anyone explain how you get this? The way I've done it is taking the €2400 as the total and getting the 3 for this year. Is this correct?
    Thanks.


Comments

  • #2
    Wkds
    Registered Users Posts: 45 ✭Wkds


    CookieMonster.x wrote: »
    Just wondering if anyone could explain this to me. I'm doing 2010 q1 which is a sole trader. One of the adjustments is 'the advertising payment is towards a 24 month campaign which began on 1/10/2009.' the figure in the trial balance is €2400. The answer is €300 in profit and loss and €2100 in balance sheet.
    Can anyone explain how you get this? The way I've done it is taking the €2400 as the total and getting the 3 for this year. Is this correct?
    Thanks.
    Three months is for this year so that's an expense.
    The remaining 21 months are prepaid so its a current asset.


  • #3
    The Big Red Button
    Closed Accounts Posts: 8,390 ✭✭✭The Big Red Button


    CookieMonster.x wrote: »
    Just wondering if anyone could explain this to me. I'm doing 2010 q1 which is a sole trader. One of the adjustments is 'the advertising payment is towards a 24 month campaign which began on 1/10/2009.' the figure in the trial balance is €2400. The answer is €300 in profit and loss and €2100 in balance sheet.
    Can anyone explain how you get this? The way I've done it is taking the €2400 as the total and getting the 3 for this year. Is this correct?
    Thanks.

    What's the year end date? 31/12/2009?

    If so, it's €2,400 / 24months * 3months = €300 Advertising Expense in the P&L for the year.

    The remaining €2,100 goes to the balance sheet as Advertising Prepaid (current asset.)


  • #4
    CookieMonster.x
    Registered Users Posts: 1,049 ✭✭✭CookieMonster.x


    Thanks for the quick replies. Thought it was that just wasn't totally sure. Thanks!


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