Given: Rates paid during the year amounted to ₦2,250 at ₦125 per month and 1,035 was paid for electricity in the same period at ₦115 per month. Determine th...

Answer Details

To find the amount of prepaid rates, we need to first determine how many months were paid for in advance. The total amount paid for rates in the year was ₦2,250, which was at a rate of ₦125 per month. This means that 2,250/125 = 18 months' worth of rates were paid. Similarly, the total amount paid for electricity was ₦1,035, which was at a rate of ₦115 per month. This means that 1,035/115 = 9 months' worth of electricity were paid. To find the amount of prepaid rates, we need to subtract the number of months paid for in advance from the total number of months in the year (12). Prepaid rates = 12 - 18 = -6 A negative result means that there is no prepaid amount, but rather an accrual of ₦750 (6 months x ₦125) as the rates were paid for in advance for the following year. Therefore, the amount of prepaid rates is ₦0, and the amount of prepaid expenses is ₦750.