An analysis of the company's insurance policies provided the following facts.
Policy Date of Purchase Months of Coverage Cost
A April 1, 2010 24 $11,640
B April 1, 2011 36 $9,624
C August 1, 2011 12 $9,240
The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)© BrainMass Inc. brainmass.com October 25, 2018, 6:35 am ad1c9bdddf
I am betting that you need the adjusting entries, even though the question got cut off. The adjusting entries would be calculated as follows:
Insurance Expense -- Policy A 11640 * 9/24 4365 DR
Prepaid Insurance 4365 ...
The solution provides the exact adjusting entries needed for the insurance policies purchased. This solution is written based on 25+ years of professional experience as an accountant and an auditor.
Basis of accounting
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