Question

In January Mookie The Beagle Concierge purchased $300 of liability insurance to cover a 3 month period. So at the end of the accounting period on January 31, 1 month of rent had expired @ $100.00. ($300/3 months = $100 per month). The balance is Prepaid Insurance Expense, an asset account with future benefit. Since Mookie The Beagle Concierge recorded the entire $300 as Insurance Expense, an adjusting entry is needed to bring accounts up to date at January 31

use these 2 accounts:

Insurance Expense (Expense)

Prepaid Expenses: Insurance (Asset)

Answer 1

Prepaid insurance expense for 3 months =$300

Insurance expense for 1 month = $100 ( 300 x 1/3)

Prepaid insurance on January 31 = Prepaid insurance expense for 3 months - Insurance expense for 1 month

= 300-100

= $200

The following journal entry will be made on January 31 :

Date	General Journal	Debit	Credit
January 31	Prepaid insurance	$200
	Insurance expense		$200

Please give a positive rating if you are satisfied with this solution and if you have any query kindly ask.

Thanks!!!