How do I adjust a trial balance for unexpired insurance? What accounts would be affected and how do I get the appropriate amount for the debit and credit to those accounts?
CaptainForest
Jan 28, 2007, 06:18 PM
On Jan 1, you buy a 13 month policy for $1,300.
Dr. Prepaid Insurance 1,300
Cr. Cash 1,300
On Dec, 31, you need to recognize 12 of those 13 months are used up.
Dr. Insurance Expense 1,200
Cr. Prepaid Insurance 1,200