NOP Ltd purchased a one-year insurance policy on 1 April. The entire premium of $8000 was recorded
Question:
NOP Ltd purchased a one-year insurance policy on 1 April. The entire premium of $8000 was recorded by debiting prepayments. Year-end is 30 June.
1. Give the 30 June adjusting entry.
2. What amount should be reported in the 30 June balance sheet for prepayments?
3. If no adjusting entry was made on 30 June, by how much would net profit be overstated or understated? Would assets be overstated or understated?
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30 June Adjusting Entry To adjust the prepayment account for the portion of the insurance policy tha...View the full answer
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Related Book For 
Financial Accounting An Integrated Approach
ISBN: 9780170411028
7th Edition
Authors: Ken Trotman, Elizabeth Carson
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