10 The company paid $2,700 cash for the premium on a 12-month insurance policy.
ID: 2367884 • Letter: 1
Question
10 The company paid $2,700 cash for the premium on a 12-month insurance policy. Coverage begins on April 11.
Date Journal entry Debit Credit
april 10 Prepaid insurance 2700
cash 2700
Unadjusted trail balance
Account title Debit Credit
Prepaid insurance 2700
Insurance expense 0
a. Two thirds of one months insurance coverage has expired.
Post adjusting entry
Debit Credit
A. Insurance expense .......
Prepaid insurance .........
Explanation / Answer
company paid $2,700 cash for the premium on a 12-month insurance policy SO monthly coverage = $2700/12 = $225 Now Two thirds of one months insurance coverage has expired = (2/3)*$225 =$150 Post adjusting entry Debit Credit A. Insurance expense 150 Prepaid insurance 150
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