[jovel zartiga]

I can't really understand this.. please I need help:

Property insured
*Building
*Truck

Date of coverage
*june1, 2011 - June 1, 2012
*oct. 1, 2011 - oct. 1, 2012

Amount paid
*12000
*6000

***assuming that the insurance of the building was paid on May 28, 2011 (ahead of the insurance coverage date) using the asset method, what is the adjusting entry on December 31, 2011?

***Assuming that the insurance of the truck was paid on October 2, 2011 (one day late of the insurance coverage date) using the expense method, what is the adjusting entry on December?

HELP!!

[paraclete]

What this question is talking about is the matching concept so that the amounts paid refer to particular reporting periods

From the information you are given that reporting period will end on December 31

1. when the premium was paid you will treat it as a prepayment because the coverage period has not yet commenced

2. when the premium is paid you will treat it as an expense

In both cases at December 31 you will calculate what part of the premium is unexpired, that part which has expired will be an expense and that part which is unexpired will be carried forward as a prepayment