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jssc_michael
May 11, 2008, 04:33 AM
Details of prepaid insurance ares hown in the account as a debit march 31 2400 dollars. Colorado pays liability insurance each year on march 31st. Record insurance expense for the year ended December 31..

I am just really confused on how to put this one together

CaptainForest
May 11, 2008, 09:02 PM
On March 31 you prepaid for 1 year.

Therefore, on December 31, 9 months have passed, so 9 months out of 12 months have been used up of the insurance.

Therefore... insurance expense is 9/12 of 2,400 which is 1,800

The JE at Dec 31 would be.
Dr. Insurance Expense 1,800
Cr. Prepaid Insurance 1,800