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A two year insurance policy for $1,320 was purchased on November 1 of the current year....

A two year insurance policy for $1,320 was purchased on November 1 of the current year. Record the transaction for the year ended December 31. A two year insurance policy for $1,320 was purchas

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Answer #1
Insurance expenses Prepaid Insurance
Dec 31 $ 110 Nov 1 $ 1,320 110 Dec 31
Bal. $ 110 Bal. $ 1,210

Working:

Adjustment entry on december 31,
Debit ($) Credit ($)
Insurance Expenses 110
Prepaid insurance 110
Working:
Insurance expenses = 1320*2/24
= 110
Total months in 2 year = 2*12
= 24
Month in the year = 2
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