On December 31, but before any year-end adjustments, McCarthy Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The Insurance Expense for the year would be:

A) $1,200.

B) $900.

C) $1,500.

D) $1,900.

E) $2,700.

Question

Business

Jacquelyn Meza

24 September, 14:29

On December 31, but before any year-end adjustments, McCarthy Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The Insurance Expense for the year would be:

A) $1,200.

B) $900.

C) $1,500.

D) $1,900.

E) $2,700.

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Answers (1)

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Phoenix Kemp · Answer 1

C) $1,500.

Explanation:

The computation of the insurance expense is shown below:

The insurance expense would be equal to the expired amount of the prepaid insurance i. e $1,500

The adjusting entry is as follows

Insurance expense A/c Dr $1,500

To Prepaid Insurance $1,500

(Being insurance expense is recorded)

Therefore, the balance of the prepaid insurance is ignored.

On December 31, but before any year-end adjustments, McCarthy Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The Insurance Expense for the year would be:A) $1,200.B) $900.C) $1,500.D) $1,900.E) $2,700.

On December 31, but before any year-end adjustments, McCarthy Company's Prepaid Insurance account had a balance of $2,700. It was determined that $1,500 of the Prepaid Insurance had expired. The Insurance Expense for the year would be:

A) $1,200.

B) $900.

C) $1,500.

D) $1,900.

E) $2,700.