Question

On December 31, 2017, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2018, $86,000 was paid for insurance.
At the end of 2018, after adjusting entries were recorded, the balance in the prepaid insurance account was 42,000. Insurance expense for 2018 would be:

(A) $92,400.

(B) $6,400.

(C) $134,400.

(D) $86,000.

Answer 1

Answer:

Insurance expense will be $92400

So option (a) will be correct option

Explanation:

We have given balance in prepaid insurance = $48400

Insurance paid in 2018 = $86400

Ending prepaid insurance balance = $42000

We have to find the insurance expense for 2018

Insurance expense for 2018 is given by

Insurance expense = $48400+$86400-$42000 = $92400

So option (a) will be the correct answer