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2 September, 10:30

On April 1, 2019, a company paid the $1,350 premium on a three-year insurance policy with benefits beginning on that date. What will be the insurance expense on the annual income statement for the year ended December 31, 2019? A. $1,350. B. $450. C. $1,012.50. D. $337.50.

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  1. 2 September, 10:54
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    The insurance expense on the annual income statement for the year ended December 31, 2019 will be D. $337.50

    Explanation:

    The company paid the $1,350 premium on a three-year insurance policy.

    The insurance expense per year = $1,350/3 = $450

    From April 1, 2019 to December 31, 2019, the company had bought the insurance for 9 months.

    The insurance expense on the annual income statement for the year ended December 31, 2019 = $450/12x9 = $337.5
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