Answer:
$28,800
Explanation:
When an insurance policy or cover is paid for in advance, the entries posted are debit prepaid insurance and credit cash account.
As the insurance cover expires, the prepaid insurance account is credited and the insurance expense account is debited. Hence, the balance in the prepaid insurance account is the net of the debits and the credits so described.
For the liability policy, one year cover to be expensed
= 12/18 × $43,200
= $28,800
Balance left = $43,200 - $28,800
= $14,400
For the crop damage policy,
one year cover to be expensed
= 12/24 × $28,800
= $14,400
Balance left = $28,800 - $14,400
= $14,400
The balance in Eve's Prepaid Insurance account as of December 31, 2021
= $14,400 + $14,400
= $28,800
