Theodore Doherty, CPA[SUNY:Plattsburgh] the InCharge for McSoley & McCoy LLP for the 2015 audit of Cyberdyne, Inc. is reviewing the AIS entries in the re-performance of the Insurance. There are two major policies under review consideration. Aetna: Work Place Liability and StateFarm: Fire & Catastrophic Coverage. Cyberdyne is on the usual day basis for Matching. Cyberdyne, by protocol, accounts for all penalties in a PenalyIncurred Account that is reviewed by Internal Audit. The Policies in question are: Aetna: 7 years from 3Feb2011: $680,000; Booked as Insurance Expense on the contract date. Terms: Annual Payments are Due ON the anniversary date; any due payments not made within a 14Day grace period carry a $500 penalty. The day calculation made by Cyberdyne for the Aetna policy was: DayInsuranceExpense= $680,000/(7*365) ; the payments are made on an Annual Basis as $680,000/(7). StateFarm: 3 years from 15June2015. $267,000; Booked as Prepaid Insurance on the contract date. Terms: Payments of $77,000 are Due each Colander Quarter starting on the first full quarter after the purchase until the policy is fully paid. Any due payments not made within a 10Day grace period carry an increase in the remaining cost of the policy of 1% to be paid over the remaining periods. The day calculation made by Cyberdyne for the StateFarm policy was: DayInsuranceExpense= $276,000/(3*365).

Ted during the re-performance stage has retrieved the following entries from the AIS: Aetna: For 2015 A Payment was missed on 3Feb2015 and the following entry was made

3Feb2015

Prepaid Insurance $500

AccountsPayable[Aetna] $500

The payment was actually made on 12Feb2015 and the following entry was made:

11Feb2015

AccountsPayable[Aetna] $ 97,142.86

VouchersPayable $ 97,142.86

12Feb2015

VouchersPayable $ 97,142.86

Cash $ 97,142.86

For the StateFarm Policy: The First Payment was made 30Oct2015 as there was a glitch in AIS.

The Entry made was:

30Oct2015

AccountsPayable[Aetna] $77,000

VouchersPayable $77,000

30Oct2015

VouchersPayable $77,000

Cash $77,000

No other entries have been made pertaining to this transaction.

On 31Dec2015 the following entries were made:

Insurance Expense $147,553.82

PrepaidInsurance: Aetna $97,142.86

PrepaidInsurance: StateFarm $50,410.96

NO other entries were made pertaining to these Insurance Accounts. MoodleQuestions At 31Dec2015 after posting all of the above and before making & posting any adjusting or correcting entries by Cyberdyne:

1.) What is the Balance in the PrepaidInsurance[Aetna] Account?

2.) What should the balance be____________?

3.) What is the Balance in the PrepaidInsurance[StateFarm] Account?

4.) What should the balance be____________?

5.) What is the 2015 cost of the Aetna Policy?

6.) What should the cost be____________?

7.)What is the 2015 cost of the StateFarm Policy?

8.) What should the cost be____________? For the Aetna Policy, ignoring materiality, regarding the Correction of Prior Years Earnings to be booked 31Dec2015 9a.There will be a Credit to Correction of Prior Years Earnings True or False

9.b The Dollar value posted to Correction of Prior Years Earnings will be_____________.

10.) The Balance in PenalyIncurred Accounts of 31Dec2015 is_________________.