Question

On July 1, 2019, Beyonce company paid $1800 for six months of insurance coverage. No adjustments have been made to the prepaid insurance account, and it is now December 31, 2019. Prepare the journal entry to reflect expiration of the insurance of December 31, 2019.

Answer 1

Answer and Explanation:

The adjusting entries are shown below:

1. Insurance expense A/c Dr $1,800

To Prepaid insurance A/c $1,800

(Being prepaid insurance is adjusted)

Here the insurance expense is debited as it increased the expenses and credited the prepaid insurance as it decreased the assets so that the proper posting of the journal entry could be done