Final answer:
The balance in Jed's Prepaid Insurance account as of December 31, 2020, is $60,000, calculated by subtracting the used portion of the policy for that year from the total cost of the policy.
Step-by-step explanation:
The balance in Jed's Prepaid Insurance account as of December 31, 2020, can be calculated by allocating the insurance policy cost over the period it covers. Jed's Crops purchased an insurance policy for $180,000 that covers eighteen months starting from January 1, 2020. To find the expense for one month, we divide the total cost by the number of months: $180,000 / 18 months = $10,000 per month. By December 31, 2020, twelve months of the policy have been used, so the expense for these months is 12 months * $10,000/month = $120,000. The remaining balance, which is the prepaid insurance, is the original amount minus the used portion: $180,000 - $120,000 = $60,000.