Prepayment - FSTM Sample Assessment 1

Hi,

I'm going round in circles, please could you help me figure out how the prepayment figure on Q1 FSTM Sample Assessment 1 is 130?

Extract:

Insurance expenditure of £156,000, in respect of the period 1 May 20X1 - 30 April 20X2, was paid on 17 April 20X1. This cost is included in the distribution costs in the trial balance.

Distribution costs in the trial balance is £7,249k

Does anyone have the solution?

Thanks
NAF

Comments

  • NotAFluke
    NotAFluke Registered Posts: 3
    edited February 2016
    OK, mini brainwave.

    £156,000 / 12 = £13,000
    £13,000 * 10 months = £130,000

    That's not it is it!? Why is it 10 months though?

    NAF
  • daniel489
    daniel489 Registered Posts: 14
    Distribution costs are £7,249,000
    Insurance costs are £156,000 for 12 months.
    In the further information it says the year end is 30th June 20X1.
    Insurance costs were paid for between 1st May 20X1 - 30th April 20X2.
    Therefore you will only include 2 months (£26,000) in the current year to take you up to 30th June 20X1.
    And the prepayment for the following year would be £130,000.

    Hope this helps!
    NotAFluke
  • NotAFluke
    NotAFluke Registered Posts: 3
    Cheers, I understand it now.
    daniel489 said:

    Distribution costs are £7,249,000
    Insurance costs are £156,000 for 12 months.
    In the further information it says the year end is 30th June 20X1.
    Insurance costs were paid for between 1st May 20X1 - 30th April 20X2.
    Therefore you will only include 2 months (£26,000) in the current year to take you up to 30th June 20X1.
    And the prepayment for the following year would be £130,000.

    Hope this helps!

Privacy Policy