Answer:
insurance expense 1,250 debit
prepaid insurance 1,250 credit
Explanation:
the insurance contract is for 2 year so, 24 months
3,000 is the value of 24 month of insurance:
3,000 / 24 = 125 per month
From March 1st, 2018 to December 31th,2018 --> 10 months
125 x 10 = 1,250
This is the case of an accrued expense.
Our prepaid insurance will decrease by this amount and we will recognize the 1,250 insurance expense.
