Smokey Company purchases a one-year insurance policy on July 1 for $3,792. The adjusting entry on...

Smokey Company purchases a one-year insurance policy on July 1 for $3,792. The adjusting entry on December 31 is

a.debit Insurance Expense, $2,212; credit Prepaid Insurance, $2,212

b.debit Insurance Expense, $1,580; credit Prepaid Insurance, $1,580

c.debit Insurance Expense, $1,896; credit Prepaid Insurance, $1,896

d.debit Prepaid Insurance, $1,896; credit Cash, $1,896

Expert Solution

answer

c) debit insurance expense ,$1896;credit Prepaid insurance ,$1896

notes

insurance purchased on July 1 for 3792

prepaid insurance = 3792*6/12= $1896

you you purchase insurance for the coming months and years it is regarded as prepaid

ekkarill92 answered 2 years ago

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