On August 1 of Year 1 Presco Enterprises paid $1,200 cash for an insurance policy that...

Question

Question

Answer 1

Answer #1

Calculation of amount of insurance appearing on the year 1 income statement.

Amount paid on 1 August for 1 year = 1200$

Period covered in year 1= 5 months(August to December)

Amount of insurance appearing in year 1 = 1200$×5months÷12 months

=500$

Answer 2

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