Question

Prepare the answer to the following question by either entering text directly or uploading an Excel or Word file. Do NOT upload a .pdf or .jpg file or you will receive zero credit. Show computations. The prepaid insurance account has an unadjusted balance of $46,000 at December 31, 2018, the end of Hanson Company's accounting year. Insurance expense has an unadjusted $2,000 balance at the same point in time. Some policies that were in effect have expired. Some of those were renewed and some were not. The following policies are in effect at December 31, 2018: Policy Date Policy Total Premium Type Acquired Term Paid when acquired Liability 1-31-17 2 years $48,000 Auto 6-30-18 2 years 9,000 Business interruption 8-1-18 1 year 840 Determine the adjusted balance in prepaid insurance at December 31, 2018. 2.Determine the amount of total insurance expense (you need not separate the expense by policy type) to report on the income statement for the year ended December 31, 2018.

Answer 1

Answer:

Balance as on Dec 31, 2018 = 48000/2 + 9000/24*18 + 840/360*8

= 24000 + 6750 + 18.67

= 30768.67

Total Expense reported to income statement = Opening Balance + Bank payment - Closing balance

= 46000 + 9840 - 30768.67

= $ 25071.33