Question

Brief Exercise 3-5 On July 1, 2015, Dobbs Co. pays $18,600 to Kalter Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Dobbs Co., journalize and post the entry on July 1 and the adjusting entry on December 31. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 - July 1 Prepaid Insurance Insurance Expense

Answer 1

Answer
journal
Date	Account Title	Debit	Credit
Jul-01	Prepaid insurance	$     18,600
	Cash		$     18,600
	( To record prepaid insurance )
Dec-31	Insurance expense	$       3,100
	Prepaid insurance (18600/3)*6/12		$       3,100
	( To record Insurance expense )

Prepaid insurance
Jul-01	18,600	Dec-31	3,100
Dec-31	15,500
Insurance expense
Dec-31	3,100

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