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Hi Sir,
Kindly help me understand the workings for the following question;
A company’s insurance policy are shown below:
Premium for year ending 31 March 2008 paid April 2007 $ 25920
Premium for year ending 31 March 2009 paid April 2008 $ 28800What figures should be included in the financial statements for the year ended 30 June 2008?
In the SOPL, for the period from 1 July 2007 to 31 March 2008 (9 months) you take 9/12 x 25920.
For the period 1 April to 30 June 2008 (3 months) you take 3/12 x 28800.In the SOFP, the prepayment is the period from 1 July 2008 to 31 March 2009 (9 months) and is therefore 9/12 x 28800
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