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chubhunter [2.5K]
3 years ago
11

Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid

insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance? Multiple Choice $457.
Business
1 answer:
yan [13]3 years ago
7 0

Answer:

The correct option is $457

Explanation:

The amount of cash paid in respect of insurance for the current period can arrived at using the below proforma or format:

Insurance  expense in the year                                   $477

less insurance prepaid in the previous year                 ($50)

add insurance prepaid this year                                     $30

Cash paid for insurance in the current year                $457

It is important to note that the question required actual cash paid in respect of insurance in the current year,full knowing that the beginning balances in prepayment was paid for last year implies that it should be deducted and the other way round for the closing insurance prepayment this year

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PV cost of Leasing =             $12,944.78

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c) The purchase of the Leaf would involve a present value cost of $26,380 after deducting all the savings from tax.  The 40% sales value of the car at the end of 3 years = $13,112 ($32,780 x 40%).  When this sales value is discounted to PV of $9,851, the PV of the car investments becomes $16,529 ($26,380 - $9,851).  On the other hand, leasing will cost in PV the sum of $12,944.78

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