On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits...
On July 1, a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the first year ended December 31? Multiple Choice $1,200. $2,400. $1,000. $400. $1,400.
Homework Answers
Answer is as under :
Option A $ 1200
The insurance expense on the annual income statement for the first year ended December 31 is $ 1200
Reason :
Journal entry for prepaid expenses and insurance expense for the year ended as on December 31 is :
Insurance expenses DR : 1200
Prepaid ins. expes. DR : 1200
TO cash / bank CR : 2400
2400*6/12 = 1200
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