Answer:
The insurance prepaid account would have a debit balance of $6,300
Explanation:
The initial amount paid is recorded thus:
Dr Insurance prepaid $8,400
Cr Cash $8,400
The $8400 insurance prepaid for 12 months translates to an insurance expense of $700 per month, however from October 1 to the end of the year means that three months of insurance expense must recorded in the year.
Three months insurance expense=$700*3
=$2100
The recording of this is shown as :
Dr Insurance expense $2,100
Cr Insurance prepaid $2100
The entries would leave a balance of $6,300 debit in the prepaid insurance account($8400-$2100)
Answer:
$6300
Explanation:
A prepaid insurance is a part of an insurance premium payment that is made in advance before the expiration on the balance sheet. also the unexpired amount of the prepaid insurance is recorded under the head current account found on the asset side of the balance sheet.
Amount of premium paid = $8400
validity of premium = 12 months
date of premium payment = October 1 2018
balance on prepaid insurance accounts = ( 8400 / 12 ) * 9
= $6300
9 = the remaining months on the prepaid premium
