If by May 31, the unexpired insurance has expired and that by one-half month has passed since the new policy , dated June 16, went into effect. Do I need to make any adjustment ?

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Originally Posted by John_eard

If by May 31, the unexpired insurance has expired and that by one-half month has passed since the new policy , dated June 16, went into effect. Do i need to make any adjustment ?

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when did the old policy expired? When did the new policy began?
because if your new insurance started on June 16 you will only need to do a adjustment to show the expired insurance from June 16 to June 30.
for example if your insurance is for 12 month with a value of $7,200, you would divided 7200 by 12, that will give you the insurance expense per month, then you divided the result by 30 which will give you the insurance expense per day, which you will multiply by 14 that are the days that the insurance covered during the month, then you will debit your insurance expense $280 and credit your prepaid insurance for the same amount.
But if your insurance started covering immediatetly after your old insurance expired which will be the June 1 you need to calculate the insurance expense for the whole month.
hope this could help you

Help


Customer gave seller a 12 % promissory note for $ 90 0000 owed. The note calls for interest to accrue at the rate of 12% per annum, all payable upon the maturity date ( sEpt 17)


The question is, do I need to adjust the journal at the end of every month or do I need to wait until Sept 17 ?

Thanks in advance

Quote:

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Originally Posted by John_eard

Help


Customer gave seller a 12 % promissory note for $ 90 0000 owed. The note calls for interest to accrue at the rate of 12% per annum, all payable upon the maturity date ( sEpt 17)


The question is, do i need to adjust the journal at the end of every month or do i need to wait until Sept 17 ?

Thanks in advance

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if you are doing financial statements each month you need to adjustments every month, if you do financial statements anytime before September 17 you need to do adjustments to record the accrued interest and the interest expense for the period, but if you are doing financial statements on or after sept 17 you don't need to do any adjustments because at the maturity date you will be paying the note in full and the interest expense will be record it in full and cash will be credit it for the total value of note plus interest expense