Question

CREATE JOURNAL ENTRIES FOR THE JANUARY 2018 TRANSACTIONS BELOW FOR SUNFLOWER DESIGNS:

On January 1, a 24-month liability insurance policy was purchased to cover Sunflower Designs. The full cost of the policy, $1,800, was paid in cash on the same date.

. CREATE ADJUSTING JOURNAL ENTRIES FOR JANUARY 31, 2018:

Record the adjusting entry to record the use of the prepaid insurance coverage in January. The amount of the expired insurance coverage was $200. The previous months’ adjusting entries were made as required.

Answer 1

Case 1

Date	Description	Post Ref	Debit	Credit
Jan-31	Insurance expenses ($1,800/24)		$      75
	Prepaid insurance			$       75
	(To record insurance expired for the month)

Case 2

Date	Description	Post Ref	Debit	Credit
Jan-31	Insurance expenses		$ 200
	Prepaid insurance			$ 200
	(To record insurance expired for the month)

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