Accrued Expenses

On January 13, 2018 Rays Ltd is preparing to close its financial statements for the year 2017. At that date is has calculated the following accruals for 2017:

Electricity for December 2017 $2,000

Water for December $650

Audit fees for the year 2017 $5,500

On March 14, 2018, it has paid the above expenses in full, however audit the fees actually paid were $5,000 since the auditors decided to give a discount to the company.

You are required to:

Prepare the journal entries for 2017 and 2018 taking into account the above.