Question

The prepaid insurance account had a beginning balance of $6,600 and was debited for $2,300 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 $4,100.

Answer 1

Explanation:

The adjusting entry is as follows

Insurance expense A/c Dr  $4,800

           To Prepaid insurance A/c  $4,800

(Being the insurance expense is recorded)

The computation is shown below:

= Beginning balance + debited amount - unexpired insurance amount

= $6,600 + $2,300 - $4,100

= $4,800

So while preparing the adjusting entry, we debited the insurance expense account and credited the prepaid insurance account