Question 4.4: Suppose, in Example 4.3, that sundry expenses included a pay...

Accounting for Business Students

Suppose, in Example 4.3, that sundry expenses included a payment of $200 which related to a later period.

The sundry expenses figure would need to be reduced and an asset account set up. The expense would then be transferred to the profit and loss account.

The journal will appear as follows:

Date	Account name and narrative reference	Posting	Debit side	Credit side
January 7	Prepaid expenses		200
	Sundry expenses			200
	Being reduction of expense for the period and setting up a prepayment
January 7	Profit and loss—sundry expenses		300
	Sundry expenses			300
	Being closing off of the sundry expenses account to the profit and loss account

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