On September 1 the BobCat Inc. paid $81,000 to JJ Insurance for 3 month Insurance beginning...
On September 1 the BobCat Inc. paid $81,000 to JJ Insurance for 3 month Insurance beginning October 1. The company did the correct recording on September 1. If financial statements are prepared on October 30, the adjusting entry to be made by the BobCat is:
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A. Increase Insurance Expense, $27,000; decrease Prepaid Rent, $27,000.
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B. Increase Insurance Expense, $27,000; decrease Prepaid Insurance, $81,000.
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C. Increase Prepaid Insurance, $81,000; decrease Insurance Expense, $81,000.
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D. Increase Insurance Expense, $27,000; decrease Prepaid Insurance $27,000
Homework Answers
The entry would be
| Interest expense (Expense +) | 27,000 | |
| Prepaid Insurance (Asset -) | 27,000 |
(81,000/3)
Option A
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