At 1 July 20X6 a company had prepaid insurance of $ 2,050. On 1 January 20X7 the company paid $9,500 for insurance for the year to 30 September 20X7.
What figures should appear for insurance in the company’s financial statements for the year ended 30 June 20X7?
Answer
| SPLOCI | SOFP | |
| $ | $ | |
| Prepaid insurance | 2,050 | |
| Payment January 20X7 | 9,500 | |
| Prepayment July-Sept 20X7(9,500/12 x 3) | (2,375) | 2,375 |
| Insurance expense and prepaid insurance | 9,175 | 2,375 |