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A one-year insurance policy was purchased on June 1 for $1,920. Journalize the adjusting entry required on December 31. If an amount box does not require an entry, leave it blank.
Dec. 31
- Select - - Select -

- Select - - Select -

Respuesta :

The adjusting entry will be $1120 for the insurance expense. The insurance expense will be debited while the prepaid balance is credited.

How to calculate the insurance expense?

From the information given the insurance expense will be;

= $1920 × 7/12

= $1120

The prepaid balance will also be $1120. Therefore, the adjusting entries will be to debit and credit the amount of $1120.

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