### Adjusting Entry for Prepaid InsuranceThe prepaid insurance account had the following transactions during the year:- **Beginning Balance**: $3,755- **Premiums Paid During the Year**: $6,755 (debited)**Objective**: Journalize the required adjusting entry at the end of the year.Assumptions:- The amount of unexpired insurance related to future periods is $2,640.Refer to the Chart of Accounts for the exact wording of account titles.#### Adjusting Entry Calculation1. **Total Prepaid Insurance** (Beginning Balance + Premiums Paid) \[ \$3,755 + \$6,755 = \$10,510 \]2. **Expired Insurance** (Total Prepaid Insurance - Unexpired Insurance) \[ \$10,510 - \$2,640 = \$7,870 \]#### Journal Entry- **Debit**: Insurance Expense $7,870- **Credit**: Prepaid Insurance $7,870This adjusting entry ensures that the expired portion of the prepaid insurance is recorded as an expense in the current accounting period, aligning the financial records with the matching principle in accounting.

The adjustment entries are prepared at year end to adjust the revenue and expenses of the current…

The prepaid insurance account had a beginning balance of $3,755 and was debited for $6,755 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $2,640. Refer to the Chart of Accounts for exact wording of account titles.

The prepaid insurance account had a beginning balance of $3,755 and was debited for $6,755 of premiums paid during the year. Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $2,640. Refer to the Chart of Accounts for exact wording of account titles.

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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