Question

The prepaid insurance account had a beginning balance of $4,500 and was debited for $16,600 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $5,600. Refer to the Chart of Accounts for exact wording of account titles.

Answer 1

Answer:

prepaid expense 15,500 debit

prepaid insurance 15,500 credit

Explanation:

The amount of unexpired insurance will be the ending balance of the account

4,500 debit

+ 16,600 premium paid

+/- adjustment

5,600 ending

4,500 + 16,600 - 5,600 = 15,500

Answer 2

Answer:

                                                                                       $                   $

Prepaid Insurance (Beginning)                                   4,500

Insurance Premium Paid                                            16,600

                    Insurances Expired                                                    15,500

                    Prepaid Insurance (Ending)                                        5,600

Explanation:

The amount of unexpired insurance related to future periods is $5,600 which will be the closing balance of this Account