question archive In January Mookie The Beagle Concierge purchased $300 of liability insurance to cover a 3 month period
In January Mookie The Beagle Concierge purchased $300 of liability insurance to cover a 3 month period
Subject:BusinessPrice: Bought3
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)
