Question

The prepaid insurance account had a beginning balance of $8,540 and was debited for $530 for premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $6,010.

Answer 1

Answer: See explanation

Step-by-step explanation:

The adjusting entry required at the end of the year will be illustrated below:

Dr Insurance expense $3060

Cr Prepaid insurance $3060

Working:

Opening prepaid insurance = $8540

Add: Insurance premium = $530

Less: Unexpired insurance premium = $6010

Insurance expense = $3060