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hi guys, I have a question from BPP , I drew the time line but still couldn’t understand the answer given in the book. Could someone kindly help me out ?
Coon Ltd.pays his rates in 10 equal instalment starting May each year. The total tax for the yr to 31/3/09 were 18900, what’s the prepayment of local taxes at 31/1/09?
The answer is : 9 instalments paid 1890*9=17010, charge for 10 months:18900*10/12= 15750, so prepayment is 17010-15750=1260.
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given in question:
tax for one year (12 months) = 18900
no of installments = 10
fiscal year starts from April and ends in Marchfirst we have to calculate is how much he has already paid upto 31/1/09
from April to january = 10 months18900/12 = 1575 (one month charge)
on the other hand
18900/10 = 1890 (one installment)in every installment he is paying for 1.2 months (1890/1575=1.2)
now we have to calculate how many installments he has paid up till january
10/1.2 = 8.3 (we will consider it as 9 installments which he has prepaid)
this means in 10 months he has paid 9 installments
which is 1890*9=17010. this is your answerfurther in your answer
17010 is 9 installments he has paid for 10.8 months so he has paid .8 months in advance.18900/12 = 1575 * 10 = 15750 <
this is the charge for 10 months
but he has paid 1701017010-15750 = 1260 is the prepayment
(i dont have bpp book so if there is anything more to this question u want to ask plz do)
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