| How to determine assets and expenses for accrual and cash basis accounting
I am having a bit of trouble understanding this question in regard to determining assets and expenses for accrual and cash basis accounting:On March 1, 2003, a company paid a $16,200 premium on a 36-month insurance policy for coverage
beginning on that date. Refer to that policy and fill in the blanks in the following table:
This is the table I have come up with:*Policy costs $450 per month.*
Balance Sheet Insurance Asset Using: ---------------------------------------------- Insurance Expense Using:
Accrual Basis/Cash Basis----------------------------------------------------------------------Accrual Basis/Cash Basis
December 31, 2003 16,200, 0-------------------------------------------------------------------------2003 16,200, 0
December 31, 2004 450, 0-----------------------------------------------------------------------------2004 0, 0
December 31, 2005 900, 0---------------------------------------------------------------------------- 2005 5400, 0
December 31, 2006 450, 0-------------------------------------------------------------------------------2006 900, 0
--------------------------------------------------------------------------------------------------------------Total 22,500, 0
Can anyone tell me if I am even on the right track with this answer?
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