The prepaid insurance account had a beginning balance of $4,500 and was debited for $16,600 of premiums paid

The prepaid insurance account had a beginning balance of $4,500 and was debited for $16,600 of premiums paid during the year. Journalize the adjusting entry (include an explanation) required at the end of the year, assuming the amount of unexpired insurance related to future periods is $5,600.

Answer:

Insurance Expense 15,500

                Prepaid Insurance 15,500

                 Insurance expired ($4,500 + $16,600 – $5,600).

Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry:

Indicate with a Yes or No whether or not each of the following accounts normally requires an adjusting entry:

a. Building

b. Cash

c. Wages Expense 

d. Miscellaneous Expense

e. Nancy Palmer, Capital

f. Prepaid Insurance

Answer:

a. No 

b. No

c. Yes 

d. No

e. No

f. Yes

The prepaid insurance account had a balance of $3,000 at the beginning of the year. The account was debited for $32,500 for premiums on policies

The prepaid insurance account had a balance of $3,000 at the beginning of the year. The account was debited for $32,500 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: (a) the amount of unexpired insurance applicable to future periods is $4,800; (b) the amount of insurance expired during the year is $30,700.


Answers:

a. Insurance Expense30,700
Prepaid Insurance30,700
Insurance expired ($3,000 + $32,500 – $4,800).
b. Insurance Expense30,700
Prepaid Insurance30,700
Insurance expired.