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in july 2004 company had a prepaid insuarnce of 8200. On 1 jan 2005 the company paid 38000 for insuarance for the year to sept 30 2005 . what figures should appear in companys financial statements ended 30 june 2005- income stmt / balance sheet
I think like this :
Prepaid (38000/12*3)=9500 for july+aug+sep
Total prepaid = 8200+9500 = 17700
Expense 38000 – 9500 = 28500trying to solve the above question, not sure they are correct,
see, from 1st july 2004 to 30th sept 2005, there are 15 months.
payments for 15 months=38000+8200=46200
insurance pay of one month=46200/15=3080income statement entries>>
insurance expense for the financial year=46200-9240=36960financial statement entries>>
prepayment on 30th june 2005= 3080*3=9240
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