Question

1. Eve's Apples opened its business on January 1, 2021, and paid for two insurance policies effective that date. The policy for equipment damage was $34,560 for 18 months, and the crop damage policy was $13,800 for a two-year term. What is the balance in Eve's prepaid insurance as of December 31, 2021?

2. Cal Farms reported supplies expense of $2,300,000 this year. The supplies account decreased by $210,000 during the year to an ending balance of $310,000. What was the cost of supplies the Cal Farms purchased during the year?

Answer 1

Qi Calculation of Prepaid Insurance: Insurance 1 $ 11,520 34560*6/18 Insurance 2 $ 6,900 13800*12/24 Q2 Calculaion of Beginning Balance of Supplies =ending balance+Decreased amount =310000+210000 =520000 Purchase of supplies =Ending balance of supplies+supplies Expense- beginning balance of supplies =310000+2300000-520000 =2090000