your company purchase a 12 month insurance policy for $36000 in January

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MrRoyal MrRoyal · Answer 1 · 2020-04-14T03:43:54+02:00

Question is incomplete

Your company purchased a twelve-month insurance policy for $36,000 in January. What's the entry to record the monthly insurance expense in March?

Answer:

Date Account and explanation

Insurance expense $3,000 (Debit)

Prepaid insurance $3,000 (Credit)

Step-by-step explanation:

Given

Insurance Policy = $36,000

Duration = 12 months

First we calculate the monthly entry.

This is calculated by dividing the cost of insurance policy by the duration.

Monthly Expenses = Cost / Number of months

Expenses = $36,000/12

Expenses = $3,000

The entry to record the monthly insurance expense in March is as follows

Date Account and explanation

Insurance expense $3,000 (Debit)

Prepaid insurance $3,000 (Credit)

abiolataiwo2015 abiolataiwo2015 · Answer 2 · 2021-10-01T15:44:18+02:00

The journal entry to record the monthly insurance expense in March is:

Debit Insurance costs $3,000

Credit Prepaid premiums $3,000

First step is to calculate the monthly expenses.

Monthly expenses = $36,000/12 months

Monthly expenses = $3,000

Now let prepare the journal entry to record the monthly insurance expense

Debit Insurance costs $3,000

Credit Prepaid premiums $3,000

(To record insurance expense)

Inconclusion The journal entry to record the monthly insurance expense in March is:

Debit Insurance costs $3,000

Credit Prepaid premiums $3,000

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