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7 July, 11:47

The correct amount of prepaid insurance shown on a company's December 31, 2018, balance sheet was $900. On July 1, 2019, the company paid an additional insurance premium of $600. In the December 31, 2019, balance sheet, the amount of prepaid insurance was correctly shown as $500. The amount of insurance expense that should appear in the company's 2019 income statement is:

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  1. 7 July, 15:10
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    The amount of insurance expense that should appear in the company's 2019 income statement is $1,000

    Explanation:

    The computation of the insurance expense is shown below:

    = Beginning balance of prepaid expense + Additional insurance premium - ending balance of prepaid expenses

    = $900 + $600 - $500

    = $1,000

    For computing the accurate value we added the opening balance of prepaid expenses, additional premium and deducted the ending balance of the prepaid expenses
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