Question

On April 1, 2014, the premium on a one-year insurance policy on equipment was paid amounting to $1,800. At the end of 2014 (end of the accounting period), the financial statements for 2014, would report A) Insurance expense, $1,350; Prepaid insurance $450. B) Insurance expense, $1,800; Prepaid insurance $0. C) Insurance expense, $0; Prepaid insurance $1,800. D) Insurance expense, $450; Prepaid insurance $1,350.

Answer 1

Option A is correct answer.

Step-by-step explanation:

Insurance expense = 1800*9/12 = $1350

Prepaid insurance = 1800*3/12 = $450