Question
In: Accounting
On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits...
On August 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will the balance be in the Prepaid Insurance account on the Balance Sheet for the current year ended December 31?
Select one:
A. $1,000.
B. $2,400.
C. $1,400.
D. $400.
E. $1,200.
Solutions
Expert Solution
Insurance premium paid on August 1 of current year.
Current year ending with December.
No. of months pertaining to current year are 5 months ( August, September, October, November and December ).
Premium paid for one year. Insurance premium prepaid for 7 months ( insurance premium paid for 12months - No. of months pertaining to current year is 5 months )
So, Prepaid insurance is $ 1,400 [ ( $ 2,400 / 12 months ) x 7 months ]
So, Answer is option C $ 1,400.
ekkarill92 answered 1 year agoRelated Solutions
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On April 1, Year8, the premium on a one-year insurance policy on
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The premium was $3,000. The company does not have any other
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The financial statements as of 12/31/Year8 would report:
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b.
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c.
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d.
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e.
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The company purchased a one-year insurance policy on November
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credit : prepaid insurance $400
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