On September 1, Rivera Company paid $21,600 for two years of insurance in advance. On September...
On September 1, Rivera Company paid $21,600 for two years of insurance in advance. On September 1, Rivera Company debited Insurance Expense, which is an alternate way of recording the initial expenditure.
Journalize the adjusting entry on December 31.
Homework Answers
Prepaid Insurance paid for 2 years as on September 1 = $21600
Insurance expenditure for 4 months = ($21600/24) *4 = $3600
Amount of prepaid insurance as on December 31 = $21600 - $3600 = $18000
Adjusting Entry as on December 31:
|
Date |
General Journal |
Debit |
Credit |
|
December 31 |
Prepaid Insurance |
$18000 |
|
|
Insurance Expense |
$18000 |
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