the prepaid insurance account had a $5,000 debit balance at december 31 before adjusting for the costs of…
the prepaid insurance account had a $5,000 debit balance at december 31 before adjusting for the costs of any expired coverage. an analysis of the company’s insurance policies showed that $820 of unexpired insurance coverage remains. note: enter debits before credits.
Answer
Explanation:
Step1: Calculate expired insurance
The initial prepaid - insurance balance is $5000 and the unexpired insurance is $820. So, the expired insurance is the difference between the initial balance and the unexpired amount. $5000 - 820=4180$
Step2: Record the adjusting entry
The expired insurance is an expense, so we debit Insurance Expense for $4180$. And we credit Prepaid Insurance for $4180$ to reduce the prepaid - insurance balance to the unexpired amount.
Answer:
| Transaction | General Journal | Debit | Credit |
|---|---|---|---|
| b. | Insurance Expense | $4180$ | |
| Prepaid Insurance | $4180$ |