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Radda [10]
3 years ago
6

On January 1, 2013, Craig Company paid the premium on a four-year insurance policy in the amount of $12,000. At that time, the f

ull amount paid was recorded as prepaid insurance. After recording the correct adjusting entry for the insurance policy on December 31, 2015, Craig Company's records would reflect what balance in the prepaid insurance account?
A. $6,000
B. $9,000
C. $3,000
D. $4,000
E. $0
Business
1 answer:
Dima020 [189]3 years ago
3 0

Answer:

option (C) $3,000

Explanation:

Data provided:

Policy duration = 4 years

Policy amount = $12,000

Date on which premium is paid = January 1, 2013

Date on which entry is adjusted = December 31, 2015

Now,

The time passed between January 1, 2013 to December 31, 2015 = 3 years

Therefore,

Amount to be recognized as insurance exp. on December 31, 2015

= \$12,000\times\frac{\textup{Time elapsed}}{\textup{Total policy duration}}

= \$12,000\times\frac{\textup{3}}{\textup{4}}

= $9,000

Thus,

The balance in the prepaid insurance account = $12,000 - $9,000 = $3,000

Hence,

The correct answer is option (C) $3,000

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Given the following list of accounts with normal balances, what are the trial balance totals of the debits and credits?
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Please see attached image to see the given data.

 

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Suppose that there is asymmetric information in the market for used cars. Sellers know the quality of the car that they are​ sel
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Answer:

$22,500

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So, Price of the car = 50% of lower quality + 50% of higher quality

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Answer:

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The issue costs and direct should be expensed immediately.

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