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Diane's Designs purchased a one-year liability insurance policy on March 1 of a year for $3,960 and recorded it as a prepaid expense. Which of the following amounts would be recorded as insurance expense during the adjusting process at the end of Diane’s first month of operations on March 31?

Respuesta :

Answer:

$330 transfer from prepaid insurance expense to insurance expense

Explanation:

we can say that on 1st March

The expense would be recorded as

Prepaid insurance account debit  = $3,960

so to cash = $3,960

For prepaid insurance recorded and cash paid

and

for 1 month insurance expense will be

1 month insurance expense = [tex]\frac{3960}{2}[/tex]

1 month insurance expense = $330

and

on 31 March

The entry will be

insurance expense account debit =  $330

so

To prepaid insurance $330

so $330 transfer from prepaid insurance expense to insurance expense

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