Firefly Beach Cottages, Inc., purchased a three-year fire insurance policy for

$4,800.The policy was purchased on July 1, 1999, and financial statements are prepared as of December 31 each year.

Required

a. Show the effects of this insurance policy on the balance sheets for each of the following years during which this policy would have an effect.

b. Similarly, calculate the effects on the income statement in each year.