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AdJusting
The balance in the prepaid insurance account, before adjustsment at the end of the year, is $14,800. I need to Journalize the adjusting entry required under each of the following alternatives for determing the amount of the adjustment (a) the amount of insurance expired during the year is $11,200; (b) the amount of unexspired insurance applicable to future periods is $3,600.
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For (a) the amount is given to you.
For (b) you have to calculate the amount of expired insurance. So take your balance in your prepaid insurance account minus the amount of unexpired insurance applicable to future periods to get your expired insurance amount. Your accounts for the adjusting entry are Insurance Expense and Prepaid Insurance. |
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