An analysis of the company\'s insurance policies provided the following facts. P

Question

An analysis of the company's insurance policies provided the following facts. Policy Date of Purchase Months of Coverage Cost A April 1, 2015 24 $ 9,600 B April 1, 2016 36 8,424 C August 1, 2017 12 7,200 The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)

insurance expense Debit Credit   

prepaid insurance Debit Credit

Explanation / Answer

Insurance expense 7008       Prepaid insurance 7008 Calculations: Policy A 1200 =9600/24*3 Policy B 2808 =8424/36*12 Policy C 3000 =7200/12*5 Total 7008

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