Question

Required information [The following information applies to the questions displayed below.] A company makes the payment of a one-year insurance premium of $3,504 on March 1, 2019. a-1. Use the horizontal model to record the above transaction. (Use amounts with + for increases and amounts with - for decreases.) Balance Sheet Assets Liabilities + Stockholders' Ec

Answer 1

a.

Assets		=	Liabilities		+	Stockholders Equity
Cash	$ (3,504)
Prepaid insurance	$   3,504

b.

Assets

=

Liabilities

+

Stockholders Equity

Net income

=

Revenues

-

Expenses

Prepaid insurance ($3,504/12*1)

$ (292)

Retained earnings

$ (292)

$           (292)

Insurance expense

$ 292

c.

Prepaid insurance balance ($3,504/12*2)

$ 584

d.

Non current assets ($7,008/24*2)	$     584
current assets ($7,008/24*12)	$ 3,504

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