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26 August, 11:16

Bristol, INC. paid $800 for a 4-month insurance policy on August 1 of the current year. On August 31, Bristol, Inc. made an adjusting entry to account for the insurance that expired during the month of August. The adjusting entry contained a debit to Insurance Expense in the amount of ___ and a credit to Prepaid Insurance in the amount of ___. The remaining balance in the Prepaid Insurance account after the adjustment was ___?

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  1. 26 August, 12:54
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    200; 200; 600

    Explanation:

    Given that

    Four month insurance policy amounted to $800

    So for one month, it is

    = Four month insurance policy : number of months

    = $800 : 4

    = $200

    So, the journal entry is

    Insurance expense A/c Dr $200

    To Prepaid insurance A/c $200

    (Being the insurance expense is recorded)

    And, the remaining balance in the prepaid insurance account is

    = $800 - $200

    = $600
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