At 31 March 20X4 a company had oil in hand to be used for heating costing $2,050 and an unpaid heating oil bill for $900.
At 31 March 20X5 the heating oil in hand was $2,325 and there was an outstanding heating oil bill of $800 .
Payments made for heating oil during the year ended 31 March 20X5 totaled $8,650
Based on these figures, what amount should appear in the company’s statement of profit or loss and other comprehensive income for heating oil for the year?
Answer
Used Oil = opening oil + purchase – ending oil
Closing accrual for oil = opening accrual + purchase – payment
Purchase = Closing accrual for oil + payment – opening accrual
= 800 + 8,650 – 900= 8,550
So used oil = $2,050 +8,550 – 2,325= 8,275