Question

On December 31, 2017, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2018, $68,000 was paid for insurance. At the end of 2018, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense recorded for 2018 would be:_______

A. $86,000.
B. $134,400.
C. $74.400
D. $92,400

Answer 1

C. $74.400

Step-by-step explanation:

The computation of the insurance expense for the year 2018 is shown below:

Starting balance in Prepaid Insurance account $48,400

Add: Insurance during 2018 $68,000

Less: year-end balance of prepaid insurance -$42,000

Insurance expense recorded for the 2018 year $74,400

Hence, the correct option is C. $74,400