Asked Sep 30, 2019

At the beginning of 2009, A company prepaid insurance in the amount of 120,000 for one year. At the end of December 2009 what are the balances of the prepaid insurance account and the insurance expense account.


Expert Answer

Step 1

Beginning prepaid insurance balance is 120,000 for one year, it means insurance premium is paid in advance for one year or twelve months. This advance payment of insurance expense will not be recognized as insurance expense, till it has been incurred in the business.

Step 2

Thus, at the end of the year prepaid insurance expense of 120,000 will recognized a...

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