Ask Question
BusinessBusiness
22 May, 23:52

Fred Company paid $48,000 for a two-year insurance policy, ($2,000 per month), on October 1 and recorded the $48,000 as a debit to Prepaid Insurance and a credit to Cash. What adjusting entry should Fred make on December 31, the end of the accounting period (no previous adjustment has been made) ? Select one: a. Debit: Prepaid Insurance 6,000 Credit: Insurance Expense 6,000 b. Debit : Insurance Expense 6,000 Credit: Prepaid Insurance 6,000 c. Debit: Insurance Expense 24,000 Credit: Prepaid Insurance 24,000 d. Debit: Prepaid Insurance 42,000 Credit: Insurance Expense 42,000

+2
Answers (1)
  1. 22 May, 23:55
    0
    The adjusting entry Fred should make on December 31, the end of the accounting period:

    b. Debit : Insurance Expense 6,000 Credit: Prepaid Insurance 6,000

    Explanation:

    On October 1, Fred Company paid $48,000 for a two-year insurance policy, ($2,000 per month)

    From October 1 to December 31, Fred Company has used the insurance for 3 months.

    Insurance Expense = $2,000 x 3 = $6,000

    The adjusting entry Fred should make on December 31, the end of the accounting period:

    Debit Insurance Expense $6,000

    Credit Prepaid Insurance $6,000
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Fred Company paid $48,000 for a two-year insurance policy, ($2,000 per month), on October 1 and recorded the $48,000 as a debit to Prepaid ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Flynn Company's monthly bank statement showed the ending balance of cash of $22,750. The bank reconciliation for the period showed an adjustment for a deposit in transit of $2,300, outstanding checks of $3,250, a NSF check of $870, bank service
Answers (1)
Stuart owns 300 shares of Turquoise Corporation stock and 2,000 shares of Blue Corporation stock. During the year, Stuart received 150 shares of Turquoise as a result of a 1-for-2 stock split. The value of the shares received was $4,800.
Answers (2)
Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $255,000 and each with an eight-year life and expected total net cash flows of $408,000.
Answers (1)
Which of the following is NOT a standard requirement found in a lease agreement ... ? A) Lease must be written in plain language B) Must be in writing for leases longer than one year C) Description of the premises D) The tenant must have a high
Answers (1)
Team cohesiveness does not necessarily lead to higher team productivity.
Answers (1)
New Questions in Business
Lewis Inc. had the following information taken from various accounts for 2015: Sales Discounts $41,000 Unearned Revenue $32,000 Total Sales $459,000 Purchase Discounts $15,000 Sales Allowances $35,000 Accounts Receivable $205,000 What was Lewis Inc.
Answers (1)
True or False: The basic economic theory of supply and demand suggests that when price drops, consumers will buy more and thus generate stronger demand.
Answers (1)
If you think carefully about what you're doing, always ask for advice when you need it, and keep asking questions, starting a business can be
Answers (2)
16. What size paper should you use for a legal document? A. 3" x 5" B. 8/2" x 11" C. 872" x 14" D. 74" x 1072"
Answers (2)
Assume an economy where there are two producers: a wheat producer and a bread producer. In a given year, the wheat producer grows 30 million bushels of wheat of which 25 million bushels are sold to the bread producer at $3 per bushel, and 5 million
Answers (1)
Home » Business » Fred Company paid $48,000 for a two-year insurance policy, ($2,000 per month), on October 1 and recorded the $48,000 as a debit to Prepaid Insurance and a credit to Cash.
Sign Up Forgot Password?