A one-year insurance policy was purchased on June 1 for$2,400. The adjusting entry on December 31...

A one-year insurance policy was purchased on June 1 for $2,400. The adjusting entry on December 31 would be (assume no adjustments have been made for insurance at all during the current year):

Date	Account Titles	Debits	Credits

Solutions

Expert Solution

Cost of one year insurance policy = 2400

Insurance expenses from June 1 to December 31 (7 months)

=( 2400/12 ) * 7 = 1400

Adjusting entry as on December 31:

Insurance expenses Dr 1400

Prepaid Insurance Cr 1400

ekkarill92 answered 1 year ago

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