Question

Eve's Apples opened for business on January 1, 2021, and paid for two insurance policies effective that date. The liability policy was $55,800 for 18 months, and the crop damage policy was $19,200 for a two-year term. What was the balance in Eve's Prepaid Insurance account as of December 31, 2021?

Answer 1

The balance of Eve's Prepaid Insurance account as of December 31, 2021 is $28,200

Step-by-step explanation:

Computation of prepaid Insurance

Insurance 1 ($55,800*6/18) = $18,600

Insurance 2 ($19,200*12/24) = $9,600

Total Prepaid Insurance $28,200