Answered: A one year insurance premium of $4,400…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A one year insurance premium of $4,400 was paid on October 1, 2021 by the Cool Company, for coverage beginning on that date. As of December 31, 2021, the unadjusted balances were $4,400 for Prepaid Insurance and $0 for Insurance Expense.

What amount should be reported on the 2021 Balance Sheet as Prepaid Insurance?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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