Question

At December 31, 2018, before any year-end adjustments, Concord Company's Insurance Expense account had a balance of $2570 and its Prepaid Insurance account had a balance of $3900. It was determined that $2700 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be

Answer 1

Answer:

The adjusted balance for Insurance Expense for the year will be $5,270

Explanation:

Prepaid Insurance is the value of Insurance paid before it becomes accrued and it is an current asset balance. It will be accrued as each month passes the monthly amount will be charged as expense and transferred to the Insurance expense account.

Unadjusted values:

Insurance Expense = $2,570

Prepaid Insurance = $3,900

Adjustment value of the insurance = $2700

Adjusted values:

Insurance Expense = $2,570 + $2,700 = $5,270

Prepaid Insurance = $3,900 - $2,700 = $1,200