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    I understand everything in the question, but cannot get my head round how they got the figure 1417 for insurance under expenses. Could anyone work me through it?Name:  Untitled.png
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    (Original post by Shazzy69)
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    I've moved this across to the Accounting and finance study help forum (the Accounting and finance forum is for questions about different university courses/a place to chat to fellow applicants and students)
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    (Original post by Shazzy69)
    I understand everything in the question, but cannot get my head round how they got the figure 1417 for insurance under expenses. Could anyone work me through it?Name:  Untitled.png
Views: 74
Size:  163.7 KBAttachment 528225528227
    Okay, your insurance charge

    Prepaid b/fwd falls into charge year to 31/5/11 ,£750 (1/6/10-31/12/10)
    Paid 1/1/11 £1600 for year re 1/1/11 to 31/12/11

    Amount due to 31/5/11 is 5/12 x £1,600= £666.67
    So adding this to £750 gives you £1,417.

    The secret here was really to reconstruct opening balance sheet with the data given, if you did that with either T accounts or extended trial balance the b/fwd prepaid adjustment would be obvious, and you would see closing insurance prepaid as £933.33 (1/6/11 to 31/12/11)

    Hope this makes sense
 
 
 
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