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“At 1 July 2014, a company had prepaid insurance of $8,200. On 1 January 2015 the company paid $38,000 for insurance for the year to 30 September 2015
What figure should appear for insurance in the company’s financial statements for the year ended 30 June 2015?”The correct answer is $36,700 of Insurance expense on the Income Statement and $9,500 of Prepayments on the Statement of financial position,
In this question its says on 1 Jan they paid 38000 for year to sep 2015. I thought it means that insurance is paid for 9 months. But in the answer they have divided it by 12 then calculated prepayment can you please explain
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