Question

Write the adjusting entry for the following transactions: Insurance expense: On February 28, 2020 Stark Industries paid $1,212 for a sixmonth insurance policy on the automobile purchased that date; on March 31, 2020, Stark Industries renewed and paid for the one-year policy on the equipment at a cost of $960.

Answer 1

SOLUTION : 1
		Calculation of insurance expenses
		Advance insurance paid	$                         121
		Divide By :	"/" By
		No. of Months for insurance paid	6 Month
		Per month Insruance Expenses = $ 121 / 6 Months =	$                     20.17	Per month
		Adjusting entry of the same at the end of the Month of March is done as below
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
	Mar 31. 2020	Insurance Expenses	$                     20.17
		Prepaid Insurance		$                   20.17
SOLUTION : 2
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
	Mar 31. 2020	Prepaid Insurance	$                   960.00
		Cash		$                960.00