The prepaid insurance account had a balance of $5,400 at the beginning of the year. The account was debited for $6,000 for premiums on policies purchased during the year. Journalize the adjusting entry required at the end of the year for each of the following situations: (a) the amount of unexpired insurance applicable to future periods is $1,000; (b) the amount of insurance expired during the year is $10,400.

First you have to add your beginning balance and the amount debited for premiums on plicies purchased during the year. This is known as your Prepaid Insurance Account balance.

For (a) your Pepaid Insurance balance at the end of the year is $1,000 so you have to do an adjusting entry to bring your Preapid Insurance Account balance down to $1,000

For (b) simply do the adjusting entry for the amount given.

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Originally Posted by pready

First you have to add your beginning balance and the amount debited for premiums on plicies purchased during the year. This is known as your Prepaid Insurance Account balance.

For (a) your Pepaid Insurance balance at the end of the year is $1,000 so you have to do an adjusting entry to bring your Preapid Insurance Account balance down to $1,000

For (b) simply do the adjusting entry for the amount given.

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I am a visual learner, so not fully grasping your response. But thak you for your reply.

Your Unexpired insurance account beginning balance is $5,400
+ $6,000 Deposit
= $10,400 Unexpired Insurance account balance

(a) Ending Account balance = $1,000
So $10,400 available Unexpired Insurance minus?? Insurance Expense(insurance used) = $1,000 ending Unexpired Insurance. $10,400 - 1,000 = $9,400 Insurance Expense (insurance used during the period).? = $9,400
Your Journal entry is:
Debit Insurance Expense for $9,400
Credit Unexpired Insurance for $9,400

Now there is $1,000 account balance in the Unexpired Insurance account because $10,400 - $9,400 = $1,000

(b) Your insurance expired during the period is $10,400
Your Unexpired Insurance account balance is $10,400 - Insurance used during the period of $10,400 = $0 ending Unexpired Insurance account balance.
Your journal entry is:
Debit Insurance Expense for $10,400
Credit Unexpired Insurance for $10,400

So your Unexpired Insurance account balance is $10,400 - Insurance used of $10,400 = $0 Unexpired Insurance