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On the first day of the month, a Co. had prepaid insurance of $10000. On the first day of month 8, it paid, in full, the annual insurance invoice of $36000 to cover the following year.
What amounts are shown in SOPL and SOFP?What I answered is
Prepaid b/f 10,000
Cash paid 36000
Prepaid c/f (36000×8/12) because the rest of the 4 months I’ve covered in my year. Although the solution at the back of the kit is that they have subtracted (36000×7/12) .. why is that??
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