What is the correct entry for this?

August 5th
Paid $2,400 on a one-year insurance policy, effective August 1.

Debit Prepaid Insurance for the amount
Credit Cash for the amount paid

Even though the entry is for August 5th?

Quote:

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Originally Posted by mjacobson86

even though the entry is for august 5th?

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Not quite... you give it a try and let me know any assumptions you have made...

OK so would it be:

dr. prepaid insurance 1960
Insurance expense 40
Cr. Cash 2000

How often does the company close its books? What is your assumption here that we need to be completely accurate as of Aug 5? Or are we following a monthly closing schedule?

Well its just a comprehension problem for the month of August, no other months.

Than 1/12 of the policy is expense and 11/12 go to prepaid...

I need help with these entires.

Record the interest incurred on the note for the month. Note is 8,000 with 9% 36 month note.

Accrued but unpaid employee salaries were $600.

I have: dr. salaries expense 600
Cr. Salaries payable 600

2nd one is right, any ideas on the 1st? Let me know how you get your numbers.

I got

dr. interest expense 20
Cr. Interest payable 20

I did 8000*.09/36

9% rate per year so

.09/12

But you have most of it correct.