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Ajustment to preaid insurance
I left out a part of my previous question that has left me confused.
If my Prepaid Insurance Bal. on Jan 1 is $ 400 and on Mar 31 each year I prepay $3600. At Dec 31 $600 is still prepaid. How would I go about making an accounting adjustment. |
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Your adjusting entry will be for how much insurance that was used during the period. To calculate this figure take your beginning balance + your purchases - your ending inventory = amount of Prepaid insurance used during the period. The entry to record the Prepaid insurance used is: Debit Insurance Expense for the amount used Credit PrePaid Insurance for the amount used |
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