Prepaid Insurance Special Corp. paid $12,000 for a 5-year insurance policy covering all losses from business interruption resulting from fire, wind, or other casualties.

Payment on the policy was made on April 1, 2000, with coverage beginning immediately.

a. Prepare a schedule showing the amount of insurance expense to be reported in each of the years covered by the policy and the balance sheet amounts relating to insurance that should be reported each period.

b. At December 31, 2000, should a portion of the amount paid for insurance be reported as a noncurrent asset? Explain your answer.

c. Present the journal entries to be recorded by Special Corp.

in 2000 and 2001 related to the insurance policy.