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Question 5
Premium for the year ended 31/03/2008 paid April 2007 = 25,920
Premium for the year ending 31/03/2009 paid April 2008 = 28,800The answer to this question was given as 3/4 x 25920+1/4 x 28,800=26,640;prepayment 3/4 x 28,800
My question is how do you came up with the 3/4 and 1/4 and the prepayment of
3/4 in your workings.Our year is 1 Jul to 30 Jun 2008.
From 1 Jul 07 to 31 Mar 08 is 9 months and is part of the bill of 25920 which was for 12 months. So the cost for those 9 months is 9/12 x 25920 (9/12 is the same as 3/4!)
From 1 Apr 08 to 30 Jun 08 is 3 months and is part of the bill of 28800 which was for 12 months. So the cost for those 3 months is 3/12 (or 1/4) x 28800.
The prepayment is the 9 months from 1 Jul 08 to 31 Mar 09.
is their is any easy methods to remember formats of prepayments and Accruals accounts. while i do although all practice i done these things wrong.
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