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The trial balance for Skysong, Inc. appears as follows: Skysong, Inc. Trial Balance December 31, 2022 Cash $280 Accounts Receivable 480 Prepaid Insurance 75 Supplies 166 Equipment 3680 Accumulated Depreciation, Equipment $550 Accounts Payable 353 Common Stock 1100 Retained Earnings 1290 Service Revenue 2768 Salaries and Wages Expense 920 Rent Expense 460 $6061 $6061 If, on December 31, 2022, the insurance still unexpired amounted to $18, the adjusting entry would contain a:

Respuesta :

Answer:

Debit Insurance expenses for $57

Credit Prepaid insurance for $57

Explanation:

From the Trial Balance, Prepaid Insurance is $75. Since on December 31, 2022, the insurance still unexpired amounted to $18, the insurance expenses for the year can therefore be calculated as follows:

Insurance expenses = $75 - $18 = $57

The adjusting entries will therefore be as follows:

Particulars                             Dr ($)                   Cr ($)    

Insurance expenses                57

Prepaid insurance                                               57

(To record insurance expenses for the year.)                

Note that the amount of $18 unexpired insurance will now be the Prepaid insurance that will appear as an asset under the Current Asset in the balance sheet, while the $57 insurance expenses will be charged as an expense in the income statement.

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