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Ridgewood Company had the following ending balances on its financial statements: 2018 2019$1,400 $ 900 $1,100 Insurance expense $12,500 $12,800 $12,600How much did Ridgewood pay for insurance during 2019?$10,700A$12,300В$10,900с$12,100

Question

Reidgewood company had the following ending balances on its financial statements: 2018 2019 2020 Prepaid insurance $1,400 $900 $1,100 Insurance expense $12,500 $12,800 $12,600.

how much did ridge wood pay for insurance during 2019?

Ridgewood Company had the following ending balances on its financial statements: 2018 2019
$1,400 $ 900 $1,100 Insurance expense $12,500 $12,800 $12,600
How much did Ridgewood pay for insurance during 2019?
$10,700
A
$12,300
В
$10,900
с
$12,100
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Ridgewood Company had the following ending balances on its financial statements: 2018 2019 $1,400 $ 900 $1,100 Insurance expense $12,500 $12,800 $12,600 How much did Ridgewood pay for insurance during 2019? $10,700 A $12,300 В $10,900 с $12,100

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check_circleAnswer
Step 1

Insurance expenses refers to the used amount of the insurance. It is the amount paid for the insurance for a period.

Prepaid insurance refers to the amount which the insurer has paid for the coming year’s insurance expense in the current year.

Step 2

Correct option is B.

R company would pay $12,300 for insurance in 2019.

Calculation of insurance amount for 2019 is as follows:

Amount (S)
12,800
(1,400)
900
12.300
Particular
Insurance expense for year 2019
Less: prepaid insurance in year 201š for year 2019
Add: prepaid insurance in year 2019 for year 2020
Insurance expense for the year
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Amount (S) 12,800 (1,400) 900 12.300 Particular Insurance expense for year 2019 Less: prepaid insurance in year 201š for year 2019 Add: prepaid insurance in year 2019 for year 2020 Insurance expense for the year

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Step 3

Working notes:

Amount of prepaid insurance in 2018 has been deducted in expense of 2019 as it represents the amount which has been already paid for insurance expenses of year 2019. It will reduce expense f...

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