Question

If Byrke ended his fiscal period with $1,000 in prepaid insurance and he

adjusted it for $500, what would have been his beginning of the fiscal period balance for prepaid insurance?

Answer 1

Byrke's beginning balance of prepaid insurance was $1,500. This is calculated by adding the end-of-period balance ($1,000) to the adjustment ($500) made for the insurance expired during the period.

Step-by-step explanation:

The subject of this question relates to accounting practices, specifically the adjustment of prepaid insurance. Prepaid insurance is considered an asset on the balance sheet, and these adjustments are common at the end of accounting periods.

Now, to find out what Byrke's beginning balance of prepaid insurance was, we revisit the given scenario. We know that Byrke ended the fiscal period with $1,000 in prepaid insurance and made an adjustment for $500. This adjustment is usually because part of the prepaid insurance has expired over the fiscal period. Thus, to calculate the beginning balance for prepaid insurance, we add the adjustment to the year-end balance:

• Ending balance of prepaid insurance: $1,000
• Adjustment (expiration of part of prepaid insurance): $500
• Beginning balance of prepaid insurance = Ending balance + Adjustment
• Beginning balance of prepaid insurance = $1,000 + $500
• Beginning balance of prepaid insurance = $1,500

Thus, Byrke's beginning balance of prepaid insurance at the start of the fiscal period was $1,500.