Answered: Adjusting journal entry December 31…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Adjusting journal entry December 31 2021:

Dr. Insurance Expense 24000

Cr. Pre-Paid Insurance 24000

If the beginning balance in prepaid insurance was 1500 and 30,000 was recorded in the balance sheet for an insurance premium during the year, what is the ending balance in pre-paid insurance after the adjusting entry?

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

Expert Solution

Step 1

Opening balance of prepaid insurance = 1500

Purchase of prepaid insurance = 30000

Consumption of prepaid insurance = 24000

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