the prepaid insurance account had a $6,000 debit balance at december 31 before adjusting for the costs of…
the prepaid insurance account had a $6,000 debit balance at december 31 before adjusting for the costs of any expired coverage. an analysis of the company’s insurance policies showed that $600 of unexpired insurance coverage remains. note: enter debits before credits. transaction general journal debit credit b
Answer
Explanation:
Step1: Calculate expired insurance
The initial prepaid - insurance balance is $6000 and the unexpired insurance is $600. The expired insurance is the difference between the initial balance and the unexpired amount. So, the expired insurance amount = $6000 - $600=$5400.
Step2: Determine journal entry
The expired insurance is an expense (Insurance Expense), which is debited, and the prepaid - insurance account is credited as the prepaid amount has decreased.
Answer:
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| b | Insurance Expense | $5400 | |
| Prepaid Insurance | $5400 |