Question

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The insurance premium outstanding on January 1, 2018, covers the period January 1 through August 31,...

The insurance premium outstanding on January 1, 2018, covers the period January 1 through August 31, 2018. The insurance premium of $9300 recorded in August covers the period of September 1, 2018 thru August 31, 2019. Prepaid Insurance Balance on 1/1/2018 is $3220. 11/30 Balance is $11,020. What is the adjusting journal on 12/31/18?

Solutions

Expert Solution

The Balance of Prepaid Insurance to be as on 31st Dec 2018 = 9,300x8/12 = 6,200

The Balance of Prepaid Insurance  as on 30th November 2018= 11,020

So adjustment is required of 4,820

Date Debit Credit
31-12-2018 Insurance Expense $ 4,820.00
Prepaid Insurance $ 4,820.00

ekkarill92 answered 2 years ago
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