Explore BrainMass

Explore BrainMass

    Amount of Expense Under Accrual Basis

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    I am having a problem with the following problem on accrual:
    The records for a company showed the following for 2007:

    Accrued expenses Jan 1 $1,800 Dec 31 $2,150
    Prepaid expenses Jan 1 $ 720 Dec 31 $ 870
    Cash paid during the year for expenses $42,500

    Show the computation of the amount of expense that should be reported on the income statement.

    I calculated it as $42,000 but I'm not sure that's correct.

    © BrainMass Inc. brainmass.com March 4, 2021, 8:11 pm ad1c9bdddf

    Solution Preview

    The increase in accrued expense means that cash is not paid. The amount of expense for which cash is not paid is 2,150-1,800= 350.
    The ...

    Solution Summary

    The solution explains how to calculate the amount of expense under accrual basis.