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    A00418972's Avatar
    A00418972 Posts: 1, Reputation: 1
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    #1

    Dec 5, 2013, 09:58 AM
    A company purchases a one-year insurance policy on June 1 for $1,769. Determine the a
    A company purchases a one-year insurance policy on June 1 for $1,769. Determine the adjusting entry on December 31
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Dec 5, 2013, 12:03 PM
    You have to calculate the amount of insurance used for the period of Jun 1 to Dec 31, which will be for 7 months.

    So take your amount of $1,769 times 7/12 equals your adjusting entry amount.

    Your adjusting entry will be:
    Debit Insurance Expense and Credit Prepaid Insurance for the amount calculated above.

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