In the current accounting period ended 31 October 2016, a business pays annual insurance for the year ending 30 June 2017 of 4,800

Accounting Nov 28, 2020

In the current accounting period ended 31 October 2016, a business pays annual insurance for the year ending 30 June 2017 of 4,800. What is the prepayment at the end of the year?

Expert Solution

Payment date of Prepaid insurance = 1july 2016(1year prior to insurance ending year ie 30 june 2017)

Insurance expenses for the accounting period = 4 months depreciation (1 july to 31 october)

= 4800/12*4

=1600

Prepayment at the end of the year = 4800 - 1600

= 3200 (Answer)

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