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Math Help - prepaid insurance/amortization Quest.

  1. #1
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    prepaid insurance/amortization Quest.

    Any help would be appreciated, and thank you in advance.

    Coverage period is 11/12/2009 - 11/12/2010
    Total cost= $43,098.33 (Quarterly $10,774.58 or Monthly $3,591.53)

    on 11/12/2009 the beginning balance was 14,222.46.............ending balance $14,222.46
    on 12/31/2009 the amortization is $8,021.10........................ending balance $6,201.36

    Ok so my question is how is this $8,021.10 calculated as being amortized on 12/31/09. Because when I calculate it out it comes to $5,835.05?

    Here is how I'm calculating it:
    ($43,098.33/365 days = $118.08 per day, therefore 19 days remainning in November = 19* 118.08 = $2,243.52)
    2,243.52 November + $3,591.53 December = $5,835.05

    Please help what am I doing incorrect? I know it's probably a simple math error I'm doing wrong somewhere. Thanks for your help in explaining.
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  2. #2
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    Your post is quite UNCLEAR.

    What is the REAL question: the insurance expense for 2009?
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  3. #3
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    the question I'm asking is how the $8021.10 amortization was calculated on 12/31/09?

    It's pro-rated calculated, however I'm unsure why my calculations is not adding up the same...
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  4. #4
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    Quote Originally Posted by helpme7 View Post
    the question I'm asking is how the $8021.10 amortization was calculated on 12/31/09?
    It's pro-rated calculated, however I'm unsure why my calculations is not adding up the same...
    Well, it's obvious that you're correct here:
    (except 18 days remaining may be more accurate)
    Here is how I'm calculating it:
    ($43,098.33/365 days = $118.08 per day, therefore 19 days remainning in November = 19* 118.08 = $2,243.52)
    2,243.52 November + $3,591.53 December = $5,835.05

    On this weird stuff:

    on 11/12/2009 the beginning balance was 14,222.46.............ending balance $14,222.46
    on 12/31/2009 the amortization is $8,021.10........................ending balance $6,201.36

    HOW do you know that your calculation has to end up at $8,021.10?
    Isn't that 8,021.10 the amortization for FULL year?
    WHAT is the 14,222.46; must it be used somehow?

    IF year ends at 6,201.36 and 5,835.05 is applicable to the Nov.12
    prepaid premium, then there is 6201.36 - 5835.05 = 366.31 that is
    applicable to prior to Nov.12........

    Have you posted the FULL ORIGINAL problem?
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