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JAMB Principles of Accounts 2003 Question 24

Question 24

Accruals and Prepayments

During the year ended 31st December 2001, Nuju Enterprises paid rent as follows:
Jan. 20 ₦24 000 for a period of 4 months
May 16 ₦30 000 for a period of 5 months
Oct. 15 ₦36 000 for a period of 6 months
What is the overpaid portion of the rent?

  1. A.₦36 000
  2. B.₦18 000
  3. C.₦12 000
  4. D.₦6 000
Show the answer and explanation

Answer: B (₦18 000)

Explanation

The October payment covers October to March; 3 of those 6 months fall in 2002. Prepaid = 3 × (36 000 ÷ 6) = ₦18 000.