Answer to Question #62451 in Accounting for Asif

Question

A firm prepares its annual accounts on June 30th. The ledger account shows insurance A/c (debit) Rs.800 as on July, 2005. On December 31, 2005 the annual insurance premium of Rs.2,100 became due and was paid. What amount would be charged for insurance expense as on June 30, 2006?

Answer 1

The ledger account shows insurance A/c (debit) Rs.800 as on July, 2005. If on December 31, 2005 the annual insurance premium of Rs.2,100 became due and was paid, then 2,100 - 800 = Rs.1,300 would be charged for insurance expense as on June 30, 2006.