An analysis of the company's insurance policies provided the following facts. (Adjusting Journal Entry).

Question

Policy	Start Date	Term	Cost
A	4/1/17	24	10,824
B	4/1/18	36	9,576
C	8/1/19	12	8,424

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.)

Answer 1

A. Insurance Expense 4,059

Prepaid Insurance 4,059

10,824/24 months = 451 per month 451 x 9 months (Apr-Dec) = 4,059

B. Insurance Expense 2,394

Prepaid Insurance 2,394

9,576/36 months = 266 per month 266 x 9 months (Apr-Dec) = 2,394

C. Insurance Expense 3,510

Prepaid Insurance 3,510

8,424/12 months = 702 per month 702 x 5 months (Aug-Dec) = 3,510