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The prepaid insurance account had a balance of $9,400 at the beginning of the year. The account was debited for $10,400 for premiums on policies purchased during the year.

Journalize the adjusting entry required at the end of the year for each of the following situations:
a. The amount of unexpired insurance applicable to future periods is $3,730.
b. The amount of insurance expired during the year is $18,100.

Respuesta :

Answer:

Following are the response to the given points:

Explanation:

[tex]\text{Insurance Expense} =\text{ Beginning Prepaid Insurance} + \text{Cash Premium Paid} -\text{Ending Prepaid Insurance}[/tex]

                             [tex]= \$9,400 + \$10,400 - \$3,730\\\\ = \$16,070[/tex]

[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 16,070 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]

                       [tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 16,070\\\\[/tex]

For point b:

[tex]Date \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ General \ Journal \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Dr. \ \ \ \ \ \ \ \ \ Cr. \\\\[/tex] [tex]March \ 31\ \ \ \ \ \ \ \ Insurance \ Expense \ \ \ \ \ 18,100 \ \ \ \ \ \ \ \ \ \ \ \ \ \\\\[/tex]

                       [tex]Prepaid\ Insurance \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 18,100\\\\[/tex]

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