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4 August, 04:06

On July 1m 2017, Ling Co. pays $12,400 to Marsh Insurance Co., for a 2-year insurance contract. Both companies have fiscal years ending December 31.

For Ling Col journalize the entry on July 1 and adjusting entry on December 31,

Date Account Title and Explanation Debit Credit

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  1. 4 August, 04:12
    0
    Journal entries

    Explanation:

    The journal entries are as follows

    On July 1

    Prepaid insurance Dr $12,400

    To Cash $12,400

    (Being the payment is recorded)

    On December 31

    Insurance expense Dr $3,100

    To Prepaid insurance $3,100

    (Being the insurance expense is recorded)

    It is computed below:

    = $12,400 * 6 months : 24 months

    = $3,100
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