If the prepaid insurance account had a beginning balance of $7,840 and was debited for $3290 for premiums paid during the year. The entry is:
Debit Insurance Expense $6,120
Credit Prepaid Insurance $6,120
What is the journal entry?
Amount of insurance expense for the year:
Insurance expense = Beginning balance + Premiums paid during the year - Unexpired insurance
Insurance expense = $7,840 + $3,290 - $5,010
Insurance expense= $6,120
Journalize the adjusting entry:
December 31
Debit Insurance Expense $6,120
Credit Prepaid Insurance $6,120
With this entry the Prepaid Insurance account is credited with $6,120 in recognition of the cost of the insurance that has expired during the year.
Therefore the entry is Debit Insurance Expense $6,120, Credit Prepaid Insurance $6,120.
The complete question is:
The prepaid insurance account had a beginning balance of $7,840 and was debited for $3290 for premiums paid during the year.
Required:
Journalize the adjusting entry required at the end of the year, assuming the amount of unexpired insurance related to future periods is $5,010. Refer to the Chart of Accounts for exact wording of account titles.
Journalize the adjusting entry required on December 31, assuming the amount of unexpired insurance related to future periods is $5,010.