Question

In: Accounting

On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of...

On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of $ 24,300.

Coverage began immediately. Required:

1. What is the amount of Insurance Expense relating to this insurance policy that will be reported for the year ended December 31, 2016?

2. What is the amount of Prepaid Insurance relating to this insurance policy that will be reported on the December 31, 2016 Balance Sheet?

Solutions

Expert Solution

Insurance premium paid on April30. 24300
Period f insurance policy 36 months
Monthly expense for the insurance 675
Period expired till Dec 31 2016 8 months
Insurance expense for the periiod 5400
Unexpired period on Dec 31 2016 28 months
Prepaid Insurance balance on Dec31 2016 18900
Hence:
Insurance expense for the year ended Dec31 2016: 5400
Prepaid insurance balance as at Dec31 2016: 18900

ekkarill92 answered 2 years ago
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