Question

Prepaid Insurance $11,048. The company has separate insurance policies on its buildings and its motor vehicles. Policy B4564 on the building was purchased on April 1, 2018, for $8,064. The policy has a term of 3 years. Policy A2958 on the vehicles was purchased on January 1, 2019, for $5,000. This policy has a term of 2 years.

Answer 1

Answer:

total insurance expense 5,188 dollars

insurance expense 5,188 debit

     prepaid insurance       5,188 credit

Explanation:

We calcualte the value of a single month on eahc policy and then multiply by the complete year.

8,064 building policy for 3 years:

value oer month: 8,064/ 36 = 224

expired amount on 2019: 224 x 12 = 2,688

vehicles policy: 5000 for 2 years:

5,000 / 24 = 208.33

expired amount on 2019: 208.33 x 12 = 2,500

total insurance expense 5,188 dollars