Alexander Villas: Insurance premium outstanding on 1/1/07, covers the period 1/1 through 8/31/07.We're not told the amount of prepaid insurance outstanding on 1.1.07, so I presume you will expense all of it by end Aug.insurance premium of $8460 recorded in August covers the period of 9/1/07 through 8/31/08. 75% of premiums are for general activities and 25% to selling activitiesWhen you say recorded in August I presume you paid $8,460 in August and it's meant for the next year. Upon payment,Dr Prepaid insurance $8,460Cr Cash $8,460For each month from Sept 07 to Aug 08, you pass the same entry:Dr Insurance expense - General $528.75Dr Insurance expense - Selling $176.25Cr Prepaid insurance $705 ($8,460/12)...Show more
Oscar Waddups: monthly insurance is (8460/8) 1057.5so the insurance premium paid for the period covering 9/1/07 to 8/31/08 is (1057.5*12) 12690the total insurance expense for the year ended 2007 is insurance exp from 1/1 to 8/31 8460insurance exp f! rom 8/31 to 12/31 (12690*4/12) or (1057.5*4) 4230total insurance exp for the year 12690prepaid insurance to be reflected on the balance sheet will be (12690*8/12) or (1057.5*8) 8460i hope this is the answer you're looking for...Show more
Cierra Gadbaw: prepaid coverage is once you pay your coverage rates in develop. this is variety of a protection deposit, so this is an asset, because of fact in case you cancelled the coverage, it would be refunded to you). coverage fee is going on the stability sheet, as this is an working fee. What in many cases occurs with those transactions is that the in develop charge is going on the stability sheet, and then each and each month, as you employ the coverage up, you circulate a proportion of it out of the asset to coverage fee (in all risk decrease than fee of stable bought)....Show more
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