J. brown consulting paid $2,500 cash for a 5-month insurance policy which begins on december 1. given the choices below, determine the general journal entry that j. brown consulting will make to record this transaction

Question

Bryan Hunt

Business

26 October, 06:37

J. brown consulting paid $2,500 cash for a 5-month insurance policy which begins on december 1. given the choices below, determine the general journal entry that j. brown consulting will make to record this transaction

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Maddison Moore · Answer 1

The first account to be used is prepaid insurance. This is a current asset which specifies the price of the insurance contract or also known as premiums that have been paid in advance. It signifies the amount that has been paid but has not yet expired as of the balance sheet date.

The second account to be used is cash because it was used to pay for the insurance bought.

To record this transaction:

Debit, Prepaid Insurance $2500

Credit, Cash $2500