Question

For the current year ended, Fohlen Corp. accrued 1,200 of insurance expense. The company's account balance of prepaid insurance decreased by500. Cash paid for insurance is?

Answer 1

To calculate the cash paid for insurance, the accrued insurance expense ($1,200) is added to the decrease in the prepaid insurance account balance ($500), resulting in a total of $1,700 paid in cash for insurance.

Step-by-step explanation:

The student is asking how to calculate the cash paid for insurance during the year when given information about accrued insurance expense and the change in prepaid insurance account balance. To find the cash paid for insurance, we need to adjust the accrued expense by the change in the prepaid insurance account.

The accrued insurance expense for the year is $1,200, and the prepaid insurance account decreased by $500. Therefore, the cash paid for insurance can be calculated as follows:

• Accrued Insurance Expense: $1,200
• Decrease in Prepaid Insurance: $500
• Cash Paid for Insurance = Accrued Expense + Decrease in Prepaid Insurance = $1,200 + $500 = $1,700

This means that Fohlen Corp. paid $1,700 in cash for insurance.