The balance in the prepaid insurance account, before adjustment
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The balance in the prepaid insurance account, before adjustment

EX 3-14 Adjusting entries for prepaid insurance

The balance in the prepaid insurance account, before adjustment at the end of the year, is $27.000. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment:

(A) the amount of insurance expired during the year is $20,250;

(B) the amount of unexpired insurance applicable to future periods is $6,750.


Hint
Accounts & FinanceThe date on which your insurance coverage ends is known as the insurance expiration date. No claims can be filed after this date if you have a claims-made insurance. While expired insurance is recorded as a cost and shown in the income statement for each accounting period, total prepaid expense is recorded as an asset and reported on the balance sheet at the time of purchase....

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