Answered: If Carol Company use the asset method…

Business

Accounting

If Carol Company use the asset method in payment of insurance, What would be the adjusting entry on December 31, 2017?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter3: Review Of A Company's Accounting System

Section: Chapter Questions

Problem 10P: Worksheet Victoria Company has the following account balances on December 31, 2019, prior to any...

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Question

Adjusting entries:
1. Carol Company has insured its building and a truck with Insular Insurance Co. The
following data related to the insurance coverage and premium payments. Annual premium
was paid on June 1, 2017
Property Insured
Date of Coverage
Annual Premium Paid
Building
Truck
June 1, 2017- June 1, 2020
June 1, 2017 - June 1 ,2018
36,000.00
12,000.00
a. If Carol Company use the asset method in payment of insurance, What would be the
adjusting entry on December 31, 2017?
ADJUSTING ENTRY;
EFFECT IF NO ADJUSTING ENTRY MADE
Asset
Revenue
Expense
Net Income
Liabilities
Owner's equity
b. If Carol Company use the expense method in payment of insurance, What would be the
adjusting entry on December 31, 2017?
ADJUSTING ENTRY;
EFFECT IF NO ADJUSTING ENTRY MADE
Asset
Liabilities
Revenue
Expense
Net Income
Owner's equity
How much is expense portion?
How much is the asset portion?

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