Question

A business is operating with a monthly debt for its account balance. In January, the account had a balance of $-\$1,350$ . In February, the account had a balance of $-\$725$ .

Part A
Write two different expressions that correctly represent the change in the account balance, in dollars, from January to February.

Answer 1

Step 1: Current Balance = $4700 debit

Step 2: Balance should equal = $900 debit

Explanation:

Answer 2

Explanation:

Step 1: Current Balance = $4700 debit

Step 2: Balance should equal = $900 debit

Step 3:

ADJUSTING ENTRY

Insurance Expense.....$3800 debit

...Prepaid Insurance.....$3800 credit

-----

Prepaid Insurance

$4700 debit

$3800 credit

Bal. $900

Definition

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Prepaid Insurance

The Prepaid Insurance account has a $47000 debit balance to start the year. A review of insurance policies and payments shows that $900 of unexpired insurance remains at year-end.

Step 1: Determine what the account balance equals.

Step 2: Determine what the account balance should equal.

Step 3: Record the December 31, adjusting entry to get from 1 to 2.