Which of the following generally provides the least evidence regarding the valuation of accounts receivable?A. Reviewing an agin
1 answer:
You might be interested in
Answer:
d. debit Prepaid Insurance and credit Insurance Expense, $2,550.
Explanation:
Provided insurance expense paid on 1 June $3,600 for a period of 2 years.
this is recorded as an expense, now on December 31 this will be transferred to Prepaid insurance also.
Amount to be transferred =
Because the insurance is of 2 years and for the current year it is only for 7 months 1 June to 31 December so remaining (12 months 2) - 7 = 17 months is for next upcoming period.
For this entry will be,
<u>Prepaid Insurance Dr. $2,550</u>
<u> To Insurance Expense $2,550</u>
Amount of prepaid insurance transferred to expense of insurance.