Question
The prepaid insurance account has an unadjusted balance of $46,000 at December 31, 2018, the end of Hanson Company's accounting year. Insurance expense has a
The prepaid insurance account has an unadjusted balance of $46,000 at December 31,
2018, the end of Hanson Company's accounting year. Insurance expense has a $2,000 balance
at the same point in time.
The following policies are in effect at December 31, 2018:
Policy Type Date Acquired Policy Term Total Premium Paid When Acquired
Liability 1-31-17 2 years $48,000
Auto 6-30-18 2 years . $9,000
Business interruption . 8-1-18 1 year $840
1. Determine the adjusted balance in prepaid insurance at December 31, 2018.
2. Determine the amount of total insurance expense (you need not separate the expense
by policy type) to report on the income statement for the year ended December 31,
2018.
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