Question

On July 1, 2020, Whispering Co. pays $13,620 to Metlock Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Whispering Co., journalize the entry on July 1 and the adjusting entry on December 31.

Answer 1

Answer:

jul-01 Prepaid expenses   13.620  

jul-01      Cash                              13.620

     

dec-31 Insurance policy expense 2.270  

dec-31     Prepaid expenses    2.270

Explanation:

Paid 1-jul 13620    

     

Three Years 13.620 36 months    

Monthly 378 month    

Current Year 2.270 6 months    

           

jul-01 Prepaid expenses   13.620  

jul-01      Cash                              13.620

     

dec-31 Insurance policy expense 2.270  

dec-31     Prepaid expenses    2.270