Question

The income statement of Sheridan Company for 2020 included the following items:

Interest revenue $147000
Salaries and wages expense 220000
Insurance expense 23100
The following balances have been excerpted from Sheridan Company's balance sheets: December 31, 2020 December 31, 2019
Interest receivable $18400 $14400
Salaries and wages payable 18700 7900
Prepaid insurance 2200 3100
The cash paid for insurance premiums during 2020 was __________.

Answer 1

cash paid for insurance premium 24,000

Step-by-step explanation:

We will solve using the beginning nad ending balance along with the insurance expense:

We construct the following identity

beginning prepaid insurance

+ premium on insurance (acquired)

- insurance expense (exired)

equals to

ending prepaid insurance (unexpired at end of the period)

2,200 + premium - 23,100 = 3,100

premium = 3,100 + 23,100 - 2,200 = 24,000