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18 May, 17:55

What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $9,050 before adjustment, and the unexpired amount per analysis of policies is $3,900?

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  1. 18 May, 21:18
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    The adjusting entry is as follows

    On December 31

    Insurance expense A/c Dr $5,150

    To Prepaid insurance A/c $5,150

    (Being the insurance expense is recorded)

    It is computed below:

    = Balance in prepaid insurance account - unexpired amount

    = $9,050 - $3,900

    = $5,150

    While passing the adjusting entry we debited the insurance expense account and credited the prepaid insurance account
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