on october 1, 2024, golde company paid $25,800 for one year of insurance for the period, october 1, 2024…
on october 1, 2024, golde company paid $25,800 for one year of insurance for the period, october 1, 2024 through september 30, 2025. which of the following will be part of the adjusting entry on december 31, 2024?\na. debit prepaid insurance for $19,350\nb. debit prepaid insurance for $6,450\nc. debit insurance expense for $19.350\nd. debit insurance expense for $6,450
Answer
Explanation:
Step1: Calculate the monthly insurance expense
The total insurance cost is $25,800 for 12 months. So the monthly expense is $\frac{25800}{12}=2150$.
Step2: Determine the number of months elapsed
From October 1, 2024 to December 31, 2024, there are 3 months.
Step3: Calculate the insurance expense for 3 months
The expense is $2150\times3 = 6450$. Since insurance expense is an expense account, we debit it when it increases.
Answer:
D. Debit Insurance Expense for $6,450