Final answer:
The insurance premiums earned this year are calculated by adjusting the collected premiums with the change in unearned premiums. As such, premiums earned amount to $44,000.
Step-by-step explanation:
To calculate the amount of insurance premiums earned this year, we start with the total premiums collected, which is $42,000. We also know the value of unearned premiums at the beginning and end of the year, which are $5,500 and $7,500 respectively. Earned premiums are calculated by taking the total premiums collected and adjusting it for the change in unearned premiums over the period.To do this, we subtract the beginning balance of unearned premiums from the total premiums collected and then add the ending balance of unearned premiums. So the calculation will be ($42,000 - $5,500 + $7,500), resulting in earned premiums of $44,000 for the year.
To calculate the amount of insurance premiums earned this year, we need to determine the change in unearned insurance premiums. We can do this by subtracting the beginning unearned insurance premiums from the end unearned insurance premiums. In this case, the change is $7,500 - $5,500 = $2,000.Next, we subtract the change in unearned premiums from the total insurance premiums collected to find the amount of insurance premiums earned. So, $42,000 - $2,000 = $40,000. Therefore, the insurance company earned $40,000 in insurance premiums this year.