Question

ng Company purchased a 12-month 11. On September1, 2017 JHJ Publishing Company purchased a insurance policy for $2,400. Required: Record the entry to purchase the insurance ra the entry to purchase the insurance policy on Aprill. Also, recorded the adjusting required at December 31, 2017 12. On, September 1, 2018 JHJ Rental Car Company renewed its insurance coverage at a cost of $2,400. Required: Record the entry to renew the policy on September 1,2018 and adjusting entry required on December 31, 2018. Your adjusting entry should reflect the balance in the prepaid insurance account on January 1,2018. -

Answer 1

11)	Date	Particulars			Debit	Credit
	1-Sep	Prepaid Insurance			$ 2,400.00
		To Cash				$ 2,400.00
	31-Dec	Insurance Expense			$    800.00
		To Prepaid Insurance				$    800.00
		($ 2400 x 4/12)
12)	1-Sep	Prepaid Insurance			$ 2,400.00
		To Cash				$ 2,400.00
	31-Dec	Insurance Expense			$ 2,400.00
		To Prepaid Insurance				$ 2,400.00
		[($ 2400 x 8/12) + ($ 2400 x 4/12)]

Workings:
Prepaid Insurance
Date	Particulars	Amount	Date	Particulars	Amount
9/1/2017	To Cash	$ 2,400.00	12/31/2017	By Insurance Expense	$    800.00
		$             -	12/31/2017	By Ending Balance	$ 1,600.00
		$ 2,400.00			$ 2,400.00
1/1/2018	To Beginning Balance	$ 1,600.00	12/31/2018	By Insurance Expense	$ 2,400.00
9/1/2018	To Cash	$ 2,400.00	12/31/2018	By Ending Balance	$ 1,600.00
		$ 4,000.00			$ 4,000.00
1/1/2019	To Beginning Balance	$ 1,600.00