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Home > Business & Careers > Accounting   »   Prepaid Insurance

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Old May 11, 2008, 04:33 AM
jssc_michael
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Prepaid Insurance
Details of prepaid insurance ares hown in the account as a debit march 31 2400 dollars. Colorado pays liability insurance each year on march 31st. record insurance expense for the year ended December 31..

I am just really confused on how to put this one together

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Old May 11, 2008, 09:02 PM   #2  
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On March 31 you prepaid for 1 year.

Therefore, on December 31, 9 months have passed, so 9 months out of 12 months have been used up of the insurance.

Therefore...insurance expense is 9/12 of 2,400 which is 1,800

The JE at Dec 31 would be.
Dr. Insurance Expense 1,800
Cr. Prepaid Insurance 1,800
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