Question

On December 31, 2022, before any year-end adjustments, Canterbury Shoe Repair's Prepaid Insurance account had a balance of $3,500. It was determined that $2,200 of the Prepaid Insurance had expired. The adjusted balance for Prepaid Insurance at December 31, 20122, will be________________.

Answer 1

Answer:

$2,200

Explanation:

The computation of the adjusted balance of prepaid insurance is shown below:

= Expired amount of prepaid insurance

= $2,200

Insurance expense A/c Dr $2,200

    To Prepaid insurance Cr $2,200

(Being the insurance expense is recorded)

At the time of insurance expired, the amount is transferred from current asset to the insurance expense account in the income statement