nirschl32
Feb 26, 2008, 03:08 PM
How do I journalize this
a. Unexpired insurance at December 31, $2,700.
bhet
Feb 26, 2008, 07:47 PM
Assuming you used the expense method of accounting the entry would be:
dr. prepaid insurance 2700
Cr. Insurance expense 2700
But if you used the accrual no need to adjust the unexpired but the adjustment would pertain to the expired portion
Origanl entry:
dr. prepaid insurance
Cr. Cash
Adj entry
dr. insurance exp
Cr. Prepaid isnurance
This would give you the insurance expensed out for the year, and the unexpired part of your insurance.