Question

insurance is paid for 15 months ,w.e.f, 1st April 2018

and amount is Insurance - 1,500
and end of the year is 31st March 2019​

Answer 1

Explanation:

for every 15 months amount is equal to 1500

Answer 2

Profit and loss account debited with "₹1,200"

• When preparing profit and loss accounts for the year, sometimes in adjustments, the amount for some expenses is paid in advance during the year or is paid less than the due amount meaning the amount is kept outstanding during the year.
• If an amount is paid in advance, the advance amount is deducted from the total amount paid and is then posted in the profit and loss account but if the amount is outstanding then it is added to the amount paid and then posted to the profit and loss account.
• Since the insurance amount of ₹1,500 is paid for 15 months which means 3 months of insurance is paid in advance, we need to deduct 3 months' insurance from the paid amount.
• Insurance for 1 month = 1500/15 = ₹100                                                      Insurance for 3 months = 3 * 100 = ₹300                                                          
• Insurance amount that will come in debit of profit and loss account = Total amount paid for insurance - 3 months advance                                             = 1500 - 300 = ₹1,200