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Homework answers / question archive / Prepaid Insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is $27,000
Prepaid Insurance The balance in the prepaid insurance account, before adjustment at the end of the year, is $27,000. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment: a. The amount of insurance expired during the year is $20,250. b. The amount of unexpired insurance applicable to future periods is $6,750.
Answer to the above question:
(A) The amount of insurance expired during the year is $20,25
| Journal Entry | Debit | Credit |
| Insurance Expense A/c. Dr. | 20,250 | |
| To Prepaid Insurance A/c. | 20,250 | |
| (Being Insurance Expired) |
(B) The amount of unexpired insurance applicable to future periods is $6,750.
| Journal Entry | Debit | Credit |
| Insurance Expense A/c. Dr. | 20,250 | |
| To Prepaid Insurance A/c. | 20,250 | |
| (Being Insurance Expired) ($27,000 - $6,750) |
