A trader paid insurance premium of N1,350 for 15 months ended 31st March 1991. He prepares to 31st December. How much is charges to the profit and loss acco...

Answer Details

To determine the amount charged to the profit and loss account for 1990, we need to find the portion of the insurance premium that applies to the period from January 1, 1990, to December 31, 1990. The insurance premium covers 15 months from January 1, 1990, to March 31, 1991. Therefore, the premium per month is N1,350 ÷ 15 = N90. Since we want to find the premium for the period from January 1, 1990, to December 31, 1990, we need to calculate the number of months in that period. January 1, 1990, to December 31, 1990, is a period of 12 months. Therefore, the premium applicable to that period is N90 × 12 = N1,080. Thus, the amount charged to the profit and loss account for 1990 is N1,080.