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    jssc_michael's Avatar
    jssc_michael Posts: 1, Reputation: 1
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    #1

    May 11, 2008, 04:33 AM
    Prepaid Insurance
    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's Avatar
    CaptainForest Posts: 3,645, Reputation: 393
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    #2

    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

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