Question

On December 31, 2020, Coolwear, Inc. had a balance in its prepaid insurance account of $65,400. During 2021, $103,000 was paid for insurance. At the end of 2021, after adjusting entries were recorded, the balance in the prepaid insurance account was $50,500. Insurance expense for 2021 was

Answer 1

Answer:

Insurance expense 2021 = $117900

Explanation:

The insurance expense for the year can be calculated by adding the value of the amount paid for insurance during the year in the value of prepaid insurance at the start of the year and deducting the value of the prepaid insurance at the end of the year. Thus, insurance expense for the year will be,

Insurance expense = Opening balance  +  Payment during the year  -  Closing balance

Insurance expense 2021 = 65400  +  103000  -  50500

Insurance expense 2021 = $117900