On July 1, a company paid the $1,200 premium on a one-year insurance policy with benefits...

On July 1, a company paid the $1,200 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31?

Multiple Choice

$500.
$600.
$300.
$1,200.
$900.

Expert Solution

Answer: $600

Insurance expense on the annual income statement for the first year ended December 31 will be for a period of six months from July 1 to December 31.

Insurance premium per month = $1,200/12 = $100

Insurance expense = $100 x 6 = $600.

ekkarill92 answered 2 years ago

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