Question

On July 1, 2022. Oriole Company pays $14,000 to Carla Vista Co.for a 1-year insurance contract. Both companies have fiscal years ending December 31.

Answer 1

Journal entries

Date	Accounts Name	Debit	Credit
July 01	Prepaid Insurance	$14,000
	Cash		$14,000
Dec-31	Insurance expense	$7,000
	Prepaid Insurance		$7,000

Prepaid Insurance Account Date Debit Amount Date Credit Amount 01-Jul Cash $14,000 31-Dec insurance expense $7,000 Insurance Expense Account Date Debit Amount Date Credit Amount 31-Dec Prepaid Insurance $7,000