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    notebook's Avatar
    notebook Posts: 2, Reputation: 1
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    #1

    Sep 10, 2006, 07:38 PM
    Adjusting entries
    The prepaid insurance account had a balance of $5600 at the beginning of the year. The account was debited for $1800 for premiums on policies purchased during the year. Journalize the adjusting entry required at the end of the year for each situation.
    (a) the amount of unexpired insurance applicable to future periods is $3680

    (b) the amount of insurance expired during the year is $3720
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    notebook Posts: 2, Reputation: 1
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    #2

    Sep 10, 2006, 07:50 PM
    Insurance 120
    Prepaid insurance 120


    Insurance exp 2040
    Prepaid ins 2040
    CaptainForest's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #3

    Sep 10, 2006, 09:23 PM
    Quote Originally Posted by notebook
    (a) the amount of unexpired insurance applicable to future periods is $3680
    Prepaid Insurance, Jan 1, $5,600
    Purchases, $1,800
    Total = $7,400

    Only $3,720 left.

    Therefore, 7,400-3,720 = 3,680 used up

    Dr. Insurance Expense 3,680
    Cr. Prepaid Insurance 3,680


    Quote Originally Posted by notebook
    (b) the amount of insurance expired during the year is $3720
    Dr. Insurance Expense 3,720
    Cr. Prepaid Insurance 3,720
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