Creating adjusting entries for prepaid insurance


Response to the following problem:

An analysis of the company's insurance policies provided the following facts.

Policy Date of Purchase             Months             Coverage Cost

A        April 1, 2010                      24                   $ 15,840

B        April 1, 2011                      36                    13,068

C       August 1, 2011                   12                     2,700

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost.

(Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.) [Required: Use the information to prepare adjusting entries as of December 31, 2011.

(Omit the "tiny_mce_markerquot; sign in your response.) Adjusting entries (all dated December 31, 2011]

Solution Preview :

Prepared by a verified Expert
Accounting Standards: Creating adjusting entries for prepaid insurance
Reference No:- TGS02076295

Now Priced at $20 (50% Discount)

Recommended (93%)

Rated (4.5/5)