Erika P.

asked • 09/27/19

Record the adjusting entry related to the company's insurance.

I need help with filling out the journal entry for the records below. I keep getting it wrong.



  1. An analysis of the company's insurance policies provided the following facts.


Policy Date of Purchase Months of Coverage Cost
A April 1, 2017 24 9,600$
B April 1, 2018 36 8,424 
C August 1, 2019 12 7,200 

  

The total premium for each policy was paid in full (for all months) at the purchase date, and the Prepaid Insurance account was debited for the full cost. (Year-end adjusting entries for Prepaid Insurance were properly recorded in all prior years.)


Catherine A.

Hello! Policy A: $9,600 X 3/24 = $1,200 Policy B: $8424 X 12/36 = $2,808 Policy C: $7,200 X 4/12 = $2,400 Total: $6,408
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01/16/22

1 Expert Answer

By:

J. Thomas F. answered • 09/27/19

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Insurance Expense 7472

Prepaid Insurance 7472


$9600/24 = $400 per month, then x 8 = $3200

$8424/36 = $234 per month, then x 8 = $1872

$7200/12 = $600 per month, then x 4 = $2400 Total is $7472

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Mi S.

Why the first two x8 and the third x4?
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02/03/20

J. Thomas F.

Actually, upon review, the first two should be 9, but the last one is still 4, because those are the months remaining in the year as of the date of purchase. Due to my haste in responding, I read the April purchases to be at the end of the month. So, with that said, $3600 (not $3200) and $2106 (not $1872) are the correct figures for the April policies. $2400 is correct for the August policy. I apologize for the confusion and thank you for your question.
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02/03/20

Mi S.

Ah, okay, thank you
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02/03/20

Juliet Maureen V.

The august policy, isnt it supposed to be 5 months?
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02/23/20

Juliet Maureen V.

Because it ended from august to december, it’s 5months total
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02/23/20

Robin A.

Both posted and corrected on comments are still giving wrong answer in connect.
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09/07/20

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