Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided: Make the initial journal entry for the purchase of the single insurance policy: DR a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable a) $2,500 b) $3,500 c) $6,000 CR a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable a) $2,500 b) $3,500 c) $6,000 Make the December 31 adjusting journal entry to bring the balances to correct: DR a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable a) $3,500 b) 6,000 c) $2,500 CR a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable a) $3,500 b) 6,000 c) $2,500
Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided: Make the initial journal entry for the purchase of the single insurance policy: DR a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable a) $2,500 b) $3,500 c) $6,000 CR a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable a) $2,500 b) $3,500 c) $6,000 Make the December 31 adjusting journal entry to bring the balances to correct: DR a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable a) $3,500 b) 6,000 c) $2,500 CR a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable a) $3,500 b) 6,000 c) $2,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Reviewing insurance policies revealed that a single policy was purchased on August 1, for one year’s coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided:
- Make the initial
journal entry for the purchase of the single insurance policy:
| DR | a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable |
a) $2,500 b) $3,500 c) $6,000 |
| CR | a) Cash b) Prepaid Insurance c) Insurance Expense d) Accounts Payable |
a) $2,500 b) $3,500 c) $6,000 |
Make the December 31
| DR | a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable |
a) $3,500 b) 6,000 c) $2,500 |
| CR | a) Insurance Expense b) Prepaid Insurance c) Cash d) Accounts Payable |
a) $3,500 b) 6,000 c) $2,500 |
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