Question

On February 1, 2015, a company paid an $18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table. Income Statement Insurance Expense Accrual Basis Cash Basis Balance Sheet Prepaid Insurance Accrual Basis Cash Basis Dec. 31, 2015 Dec. 31, 2016 Dec. 31, 2017 Dec. 31, 2018 2015 2016 2017 2018 Total 0 $

Answer 1

Balance	sheet			Income	statement
Prepaid	insurance			Insurance	expense
	Accrual basis	Cash basis		Accrual basis	Cash basis
Dec. 31, 2015	$13,125	$0	2015	$5,775	$18,900
Dec. 31, 2016	$6,825	$0	2016	$6,300	$0
Dec. 31, 2017	$525	$0	2017	$6,300	$0
Dec. 31, 2018	$0	$0	2018	$525	$0
			Total	$18,900	$18,900