Answer to Question #222280 in Finance for Donna

Question

How do I calculate accrued revenue with the following information: sales for year 1 are 351000 for year 2 89700 for year 3 89700 expenses for each year are 126970 and in year 1 equipment was bought for 116000 what is the accrued revenue for each year

Answer 1

Under accrual basis of accounting , revenues and expenses are recognized when received and incurred respectively. Therefore we calculate the accrued revenue as and when it is incurred as the table attached here-in.

The accrued revenue for year 1 is 108030, at the end of year 2 is 70760 and at the end of year 3 is 33490

Therefore the accumulated accrued income is 33490

As shown in the table below accrued revenue for the first year is

351000 - 126970- 116000

= 108030

second year accrued revenue is

=(108030 + 89700)- 126970

= 70760

Accrued income for at the end of the thrid year is

=(70760+89700) - 126970

= 33490