Question

b. Prepaid Insurance. The Prepaid Insurance account has a $6,690 debit balance at the start of the year. A review of insurance policies shows $1,360 of insurance has expired by year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2.

Answer 1

Dr/Cr Dr Step :1 Step :2 5,500 1,300 Prepaid Insurance 5,500 Dr 1,300 Dr Dr Step :3 Cr Dr 4,200 Insurance expense To Prepaid Insurance 4,200 b) Step :1 Step :2 Dr/Cr Dr Dr 6,690 5,330 Dr Prepaid Insurance 6,690 5,330 Dr Step :3 - Cr Dr 1,360 Insurance expense To Prepaid Insurance 1,360 Dr/Cr Dr Step :1 Step :2 33,600 22,400 Prepaid Rent 33,600 Dr 22,400 Dr Dr Step :3 Cr Dr 11,200 Rent expense To Prepaid Rent 11,200