Please see attached.
On March 1, 2003, a company paid a $16,200 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table:
Check 2005 insurance expense:
Accrual, $5,400; Cash, $0. Dec. 31, 2005,
asset: Accrual, $900; Cash, $0.
Please see the attachment for the full solution.
Under cash accounting, all expense would be recorded when the cash is paid and there would be no asset ...
This solution shows how to account for a premium in an insurance policy for a company.