Instructions X On April 1, 2016, Briggs Corp. purchases a 24-month property insurance policy for $72,000. The policy is effective immediately. Assume that Briggs prepares adjusting entries only once a year, on December 31. First Question 1. Compute the monthly cost of the insurance policy. Required: 1. Compute the monthly cost of the insurance policy. 2. Prepare the journal entry to record the purchase of the policy on April 1, 2016. 3. Prepare the adjusting entry on December 31, 2016. 4. Assume that the accountant forgets to record an adjusting entry on December 31, 2016. Will net income for the year ended December 31, 2016, be understated or overstated? Chart of Accounts ASSETS REVENUE $ per month 111 Cash 411 Sales Revenue 121 Accounts Receivable DUD 141 Inventory 152 Prepaid Insurance ASSETS LIAE 154 Office Supplies on Hand EXPENSES 500 Cost of Goods Sold 521 Salaries and Wages Expense 532 Utilities Expense 533 Insurance Expense 174 Equipment 179 Accumulated Depreciation 534 Rent Expense LIABILITIES 537 Office Supplies Expense 541 Depreciation Expense 211 Accounts Payable 231 Salaries and Wages Payable 235 Notes Payable 261 Income Taxes Payable 551 Advertising Expense 559 Miscellaneous Expenses 810 Interest Expense 910 Income Tax Expense EQUITY 311 Capital Stock 331 Retained Earnings General Journal 2. Prepare the journal entry with the impact on the financial statements to record the purchase of the policy on April 1, 2016 General Journal instructions PAGE 1 GENERAL JOURNAL IMPACT ON FINANCIAL STATEMENTS BALANCE SHEET INCOME STATEMENT DATE ACCOUNT TITLE POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE EXPENSES NET INCOME 1 2 3. Prepare the adjusting entry with the impact on the financial statements on December 31, 2016. PAGE 1 IMPACT ON FINANCIAL STATEMENTS GENERAL JOURNAL BALANCE SHEET INCOME STATEMENT DATE ACCOUNT TITLE POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY REVENUE EXPENSES NET INCOME Adjusting Entries