Violetta's Violins purchases a fire insurance policy for her storefront on August 1st, Year 1. The...

Violetta's Violins purchases a fire insurance policy for her storefront on August 1st, Year 1. The policy lasts two years, ending on July 31st, Year 3. The policy costs a total of $12,000, which Violetta pays in full up front. Assume Violetta records adjusting entries at the end of each month. Answer the following questions regarding Violetta's Year 2 financial statements ending on 12/31: How much Prepaid Insurance will show up on Violetta's Year 2 Balance Sheet? How much Insurance Payable will show up on Violetta's Year 2 Balance Sheet? How much Insurance Expense will show up on Violetta's Year 2 Income Statement

Expert Solution

Monthly insurance expired [2 year = 24 months] (12000/24)	500

Prepaid insurance on August 1st, Year 1	12,000
Less: Insurance expired [Aug to Dec = 5 months] (500*5)	2,500
Prepaid insurance on December 31st, Year 1	9,500

Prepaid insurance on December 31st, Year 1	9,500
Less: Insurance expired [Jan to Dec = 12 months] (500*12)	6,000
Prepaid insurance on December 31st, Year 2	3,500
Prepaid Insurance will show up on Violetta's Year 2 Balance Sheet	3,500

There is no insurance payable.	0
Insurance Payable will show up on Violetta's Year 2 Balance Sheet	0

*Insurance expired during year 2 [Jan to Dec = 12 months] (50012)**	6,000
Insurance Expense will show up on Violetta's Year 2 Income Statement	6,000

ekkarill92 answered 1 year ago

Ellie purchases an insurance policy on her life and names her brother, Jason, as the beneficiary....

Ellie purchases an insurance policy on her life and names her brother, Jason, as the beneficiary. Ellie pays $56,750 in premiums for the policy during her life. When she dies, Jason collects the insurance proceeds of $851,250. As a result, Jason reports gross income of?

Ruth obtains a fire insurance policy on her house from Safety Insurance Company. Later, after she...

Ruth obtains a fire insurance policy on her house from Safety Insurance Company. Later, after she moves out and the house is empty, a fire destroys the structure. Most fire insurance policies require that at the time of a loss, the insured premises be a. vacant and uninhabitable b. unoccupied but habitable c. empty d. occupied Lighting Concepts, Inc., a trade fixture vendor and installer, wants to insure itself against injuries to employees and others on the premises during and...

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.

Rose Collins insured her pizza shop with an $80,000 fire insurance policy at a $.98 annual...

Rose Collins insured her pizza shop with an $80,000 fire insurance policy at a $.98 annual rate per $100. Seven months later she canceled her policy because she failed to correct a fire hazard. What was Rose's cost for the 7-month coverage?

Smokey Company purchases a one-year insurance policy on July 1 for $4,380. The adjusting entry on...

Smokey Company purchases a one-year insurance policy on July 1 for $4,380. The adjusting entry on December 31 is a.debit Insurance Expense, $2,190; credit Prepaid Insurance, $2,190 b.debit Insurance Expense, $1,825; credit Prepaid Insurance, $1,825 c.debit Insurance Expense, $2,555; credit Prepaid Insurance, $2,555 d.debit Prepaid Insurance, $2,190; credit Cash, $2,190

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

On August 1,20x8 your calendar year firm takes out a 3 year insurance policy at a...

On August 1,20x8 your calendar year firm takes out a 3 year insurance policy at a total cost of $3600 that requires a 50% down payment and the remainder after 6 months. Insurance expense for 20x8 is what

An insurance company offers a $180,000 catastrophic fire insurance policy to homeowners of a certain type...

An insurance company offers a $180,000 catastrophic fire insurance policy to homeowners of a certain type of house. The policy provides protection in the event that such a house is totally destroyed by fire in a one-year period. The company has determined that the probability of such an event is 0.002. If the annual policy premium is $379, find the expected gain per policy for the company.

A potential customer for a $50,000 fire insurance policy possesses a home in an area that,...

A potential customer for a $50,000 fire insurance policy possesses a home in an area that, according to experience, may sustain a total loss in a given year with probability of 0.001 and a 50% loss with probability 0.01. Ignoring all other partial losses, what premium should the insurance company charge for a yearly policy in order to break even on all $50,000 policies in this area?

A customer for a $50,000 fire insurance policy has a home in an area that may...

A customer for a $50,000 fire insurance policy has a home in an area that may sustain a total loss in a given year with a probability of 0.001 and a 50% loss with a probability of 0.01. There is a 0.989 chance that the customer will make no claim in the coverage year. This same customer also wants a $20,000 renter’s insurance policy. The probability of a total loss is 0.005, the probability of a 50% loss is 0.015,...

Question