147k views
0 votes
Your company purchased a twelve-month insurance policy for $36,000 in January

whats the entry to record the monthly insurance expense in march

User Lokesh Sah
by
7.7k points

1 Answer

1 vote

Answer:

Debit Insurance expense for $3,000

Credit Prepaid insurance for $3,000

Explanation:

Before the recording entry, the monthly insurance expense has to be calculated first as follows:

Monthly insurance expense = Prepaid insurance / n ............. (1)

Where;

Prepaid insurance = Insurance policy amount = $36,000

n = number of months = 12

Substituting the values into equation (1), we have:

Monthly insurance expense = $36,000 / 12 = $3,000

Since the monthly insurance expense is $3,000, it implies that the insurance expense for March is $3,000.

the entry to record the monthly insurance expense in March will therefore look as follows:

Month Account Title DR ($) CR ($)

March Insurance expense 3,000

Prepaid insurance 3,000

(To record monthly insurance expense for March)

User Blazej SLEBODA
by
9.3k points

No related questions found