Question

On September 1, Taggert Company paid $1,800 for a 6-month insurance premium beginning September 1. Which of the following statements are correct regarding the accounting for this insurance over the six-month period? (Check all that apply.) O Check all that apply. Taggert will credit Prepaid Insurance for $300 on Sept. 30. Taggert will debit Insurance Expense for $300 on Sept. 30. Taggert will debit Instrance Expense for $1,800 on Sept. 1. O Taggert will debit Prepaid Insurance for $1,500 on Sept. 30. Taggert will debit Prepaid Insurance for $1,800 on Sept. 1. Do you know the answer? Read about this I know it Think so Unsure No idea

Answer 1

Answer: 1^st option, 2^nd option, 5^th option

Required journals are as below:

Date	Account titles and explanations	Ref.	Debit	Credit
Sept.1	Prepaid Insurance		1,800
	Cash			1,800
	To record prepaid expense for the coming 6-months at the beginning of the month.
Sept. 30	Insurance expense		300
	Prepaid Insurance			300
	To record charging of expense after the expiry of 1st month.

Amount of insurance expense = Total payments in advance × (1 / 6 months)

                                                = 1,800 × (1/6)

                                                = 300