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    snfinch's Avatar
    snfinch Posts: 3, Reputation: 1
    New Member
    		  
    #1

    Feb 24, 2009, 01:10 PM
    Prepaid insurance journal entry
    The amount in prepaid insurance represents the remainder of a 3-year plicy purchsed july1, 2006


    In the unadjusted trial balance December 31, 2008 the amount is 30,600 for prepaid insurance.

    My question is what journal entry would you do here?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Feb 25, 2009, 05:23 PM

    YOu need to calculate how much of the Prepaid insurance has been used.

    Take the cost / 3 yrs to get the yearly cost then take that amount * number of months used in the year / 12 months in the year.

    Then you need to do an adjusting entry to record that amount of insurance that was used during the period.

    The journal entry is:
    Debit Insurance Expense for the amount of insurance used during the period
    Credit Prepaid Insurance for the same amount
    amarchouhan's Avatar
    amarchouhan Posts: 4, Reputation: 1
    New Member
    		  
    #3

    Mar 26, 2012, 03:33 AM
    Insurance premium paid on 1st July entry will be
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