Ask Question
18 February, 07:21

On Nov. 1, Lyons Company pays $1000 cash for a 12-month insurance policy. Use your knowledge of what a correct journal entry should look like to identify what would be included in the correct journal entry?

+3
Answers (1)
  1. 18 February, 08:20
    0
    Insurance paid in advance

    (prepaid expense) $1000 Debit

    Cash. $1000 Credit

    Explanation: it is an expense paid in advance because we are advancing 12 months or a year of payment that should be monthly, so in order not to affect the monthly income statement of the company each month you have to register a portion of this expense paid in advance, take it to a discharge in the income statement and subsequently, regularize this item of the asset because we already disbursed the cash, however we cannot place the entire money in the statement of income.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “On Nov. 1, Lyons Company pays $1000 cash for a 12-month insurance policy. Use your knowledge of what a correct journal entry should look ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers