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14 September, 07:14

On January​ 1, 2018, the Prepaid Insurance account of​ Dogwood, Inc. had a beginning balance of $ 1,800. Three months of insurance premiums remain in this beginning balance. On February​ 21, 2018, the company paid an annual insurance premium in the amount of $ 4,100 for the period beginning March 1. On February​ 28, 2018, the balance in Prepaid Insurance is $ 1,200. A. TrueB. False

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  1. 14 September, 10:42
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    B. False

    Explanation:

    Beginning balance

    -Period of policy = expired 2 months

    -Period of unexpired insurance = 1 month (Out of 3 month, Insurance premium for period "Jan 1 to Feb 28" is expired)

    Amount in prepaid insurance insurance = $1800 * 1/3 = $600

    Current balance

    Period = "0" since period of coverage will start from 1 march

    Period of unexpired insurance = 12

    Amount in prepaid insurance = 4,100

    Thus, Total amount in prepaid insurance for the beginning and Current period = $600 + $4,100 = $4,700

    The amount in prepaid insurance is $4700, hence the balance as stipulated as Prepaid Insurance = $ 1,200 is false
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