Question

Required information (The following information applies to the questions displayed below.) A company makes the payment of a one-year insurance premium of $3,240 on March 1, 2019. a-2. Prepare the journal entry to record the above transaction. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the payment of a one-year insurance premium. Note: Enter debits before credits. Date General Journal Debit Credit Mar 01 Record entry Clear entry View general journal

Answer 1

a-2.

date	general journal	debit	credit
mar 01	prepaid insurance a/c	3,240
	..............To cash a/c		3,240

c. amount of prepaid insurance reported in balance sheet on december 31:

$3,240 *2 months remaining / 12 months

=>$540.

e.True.

prepaid expenses would be more appropriately classified as an asset than an item of income statement.