Question

Beta Co. purchased a property insurance policy by paying $7,500 cash on March 19, 2020, with...

Beta Co. purchased a property insurance policy by paying $7,500 cash on March 19, 2020, with the insurance coverage beginning on April 1, 2020. The Company correctly recorded the transaction on March 19, and no additional related entries were recorded until December 31, 2020. The effect of the December 31, 2020 adjusting entry will be:

Multiple Choice

  • Insurance expense will increase $5,625.

  • Prepaid insurance will decrease $1,875.

  • Insurance expense will increase $1,875.

  • Prepaid insurance will increase $5,625.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On March 15, 2020, Dufrane Co. paid $180,000 for a three-year insurance policy that covers April...
On March 15, 2020, Dufrane Co. paid $180,000 for a three-year insurance policy that covers April 1, 2020 through March 31, 2023. In addition, on March 21, 2020, Dufrane received $75,000 from a customer for a two-month project to be completed equally between May and June. Prepare the initial entries for March 15th and March 21st. Prepare the adjusting entries needed for March, April, and May 2020 (if any).
On October 1, 20X7, XYZ Co. purchased a fire insurance policy for $4,800 covering business property...
On October 1, 20X7, XYZ Co. purchased a fire insurance policy for $4,800 covering business property for the next 8 months (from October 1, 20X7 through May 31, 20X8), recording the entire insurance payment as prepaid insurance on the purchase date. If adjusting entries are made monthly, what was the balance in the account “prepaid insurance” on March 1, 20X8? a. $2,400. b. $600. c. $1,800. d. $3,000.
On April 1, 2020, Rare Finds Bookstore paid for an insurance policy costing $24,000 in cash...
On April 1, 2020, Rare Finds Bookstore paid for an insurance policy costing $24,000 in cash that would insure the retail building for two years against fire loss. The company accounted for this transaction on April 1, 2020 by recording a prepaid asset. If no additional accounting entries related to the transaction are made before the financial statements are prepared as of December, 31, 2020, Rare Finds Bookstore will report: Multiple Choice assets that are overstated by $9,000. assets that...
Question 3   10 Marks High Class Painting purchased a 1-year insurance policy on 1 March 2020....
Question 3   10 Marks High Class Painting purchased a 1-year insurance policy on 1 March 2020. The entire premium of $9000 was recorded by debiting Prepaid Insurance. Ignore GST. Required (a) Give the adjusting entry at 30 June for the financial year ending 30 June 2020. Type your answers to (a) in the Table included in the Response Template below. (b) What amount should be reported in the 30 June 2020 Statement of Financial Position for Prepaid Insurance? What type...
On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of...
On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of $ 19,800. Coverage began immediately. What is the amount of Insurance Expense relating to this insurance policy that will be reported for the year ended December 31, 2016? $8,800 $2,200 $4,400 $6,600 Three months of rent were prepaid on May 1 for $7,200, but two months have now expired, leaving only one month prepaid at June 30. What is the amount of rent expense...
On January 1, 2018, cash basis taxpayer pays $6,000 for an insurance policy which covers his...
On January 1, 2018, cash basis taxpayer pays $6,000 for an insurance policy which covers his business property for the period beginning April 1, 2018, and ending on March 31, 2020. How much, if any, of the $6,000 can the taxpayer deduct in 2018 (the year of payment)? a. nothing because the expense is a prepayment b. The entire $6,000 c. $3,000 d. $2,250
On May 1 2020, Desa Petaling Cleaning Services paid $1,200 for a one-year fire insurance policy...
On May 1 2020, Desa Petaling Cleaning Services paid $1,200 for a one-year fire insurance policy beginning May 1. The payment was recorded as Debit in Prepaid Insurance. On May 31 the account shows a balance of $1,200. Each month insurance expires $100 (i.e., $1,200 ÷ 12 months). Based on this information, answer the following questions: i. Make the necessary journal entries for the above transaction in complying with the concept of revenues and expenses recognition. ii. How does accrual...
Complete the necessary entries as at December 31, 2017. Each item is independent of the others....
Complete the necessary entries as at December 31, 2017. Each item is independent of the others. If applicable, the income tax rate is 25%. Ignore GST. Assume that adjusting entries are made only at year end which is December 31. 1. A company that uses a perpetual inventory system made $110,000 worth of purchases throughout 2017. At the end of the year it was discovered that a $20,000 purchase made in December had been recorded incorrectly. When the December purchase...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600...
Wildhorse Co. Trial Balance October 31, 2020 Debit Credit Cash $15,000 Supplies 2,600 Prepaid Insurance 600 Equipment 4,000 Notes Payable $4,300 Accounts Payable 2,500 Unearned Service Revenue 1,000 Common Stock 10,400 Retained Earnings –0– Dividends 700 Service Revenue 10,400 Salaries and Wages Expense 4,900 Rent Expense 800 $28,600 $28,600 Assume the following adjustment data. 1. Supplies on hand at October 31 total $500. 2. Expired insurance for the month is $100. 3. Depreciation for the month is $80. 4. Services...
Balance Sheet Assets: 12/31/19 Current Assets: Cash $               3,000.00 Accounts Receivable             &nb
Balance Sheet Assets: 12/31/19 Current Assets: Cash $               3,000.00 Accounts Receivable                    1,250.00 Prepaid Expenses $                    100.00 Total Current Assets $               4,350.00 Non-Current Assets: Property, Plant, and Equipment Land $            10,000.00 Buildings                 25,000.00 Equipment                 15,000.00 Accumulated Depreciation $          (12,000.00) Total Property, Plant, and Equipment $            38,000.00 Total Assets $            42,350.00 Liabilities: Current Liabilities Accounts Payable $                    100.00 Accrued Expense                         150.00 Salary and Wages Payable                                      -   Notes Payable                                      -   Unearned Revenue $               1,500.00 Total Liabilities $              ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT