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Confused on total premium and policy purchased

Asked Sep 11, 2010, 07:40 PM — 1 Answer
I was given a Adjust Trial Balance for January 31, 2010, the Prepaid Insurance was $2,142 and the Insurance Expense $357 fro January 31, 2010, and was asked if the amount Insurance Expense is the January 31 adjusting entry, and the original insurance premium was for one year, what was the total premium and when was the policy purchased? What I did was took $2,142 and divided that by the $357 that gave me 6 months and the $357 would be the premium? Is that the correct way?

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morgaine300 Posts: 6,564, Reputation: 1474
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Sep 11, 2010, 08:47 PM
The 6 months is correct. However, the 357, as already stated in the problem, is the expense for January.

If 2142 is for 6 months and is what is left in the prepaid account, and the policy was original for one year, how long ago was it purchased, and how much did it have to be?
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