Question is incomplete
Your company purchased a twelve-month insurance policy for $36,000 in January. What's the entry to record the monthly insurance expense in March?
Answer:
Date Account and explanation
Insurance expense $3,000 (Debit)
Prepaid insurance $3,000 (Credit)
Step-by-step explanation:
Given
Insurance Policy = $36,000
Duration = 12 months
First we calculate the monthly entry.
This is calculated by dividing the cost of insurance policy by the duration.
Monthly Expenses = Cost / Number of months
Expenses = $36,000/12
Expenses = $3,000
The entry to record the monthly insurance expense in March is as follows
Date Account and explanation
Insurance expense $3,000 (Debit)
Prepaid insurance $3,000 (Credit)
