Question

The prepaid insurance account had a beginning balance of $3,565 and was debited for $6,960 of premiums paid during the year.

What is the ending balance of the prepaid insurance account?

A) $10,525
B) $10,525 (credit)
C) $3,565
D) $6,960

Answer 1

Add the beginning balance of the prepaid insurance account ($3,565) and the premiums paid during the year ($6,960) to get the ending balance, which is $10,525.

Step-by-step explanation:

To calculate the ending balance of the prepaid insurance account, we simply need to add the premiums paid during the year to the beginning balance of the account. Given that the beginning balance is $3,565 and the additional premiums paid amount to $6,960, we can find the ending balance through the following calculation:

Beginning Balance + Premiums Paid = Ending Balance

$3,565 + $6,960 = $10,525

Therefore, the ending balance of the prepaid insurance account is $10,525.