25. company a has quarterly (3 - month) accounting periods, with the current period ending on september 30…

25. company a has quarterly (3 - month) accounting periods, with the current period ending on september 30. what would be the adjusting entry required in regard to this insurance policy at september 30. (assume that half of one month (that is, 1/24 of a year) has passed.

25. company a has quarterly (3 - month) accounting periods, with the current period ending on september 30. what would be the adjusting entry required in regard to this insurance policy at september 30. (assume that half of one month (that is, 1/24 of a year) has passed.

Answer

Explanation:

Step1: Identify the concept

This is about accounting - adjusting entries for insurance.

Step2: Analyze the time - passed

Since 1/24 of a year has passed for the insurance policy, we need to recognize the expired portion of the insurance expense.

Step3: Determine the adjusting entry

The adjusting entry will debit Insurance Expense and credit Pre - paid Insurance for the amount related to the 1/24 of a year that has passed.

Answer:

Debit Insurance Expense; Credit Pre - paid Insurance for the amount corresponding to 1/24 of the annual insurance policy cost.