On May 1,2016,a firm purchased a 1-year insurance policy for $3,600 and paid the full premium in advance.The insurance expense associated with this policy for the year ending December 31,2016,is

Question

Quizplus · Accepted Answer

Since the insurance policy was purchased on May 1st, there are only 8 months left in the year (May 1st to December 31st). Therefore, the insurance expense for the year ending December 31st is calculated as follows:

($3,600 / 12 months) x 8 months = $2,400.

So the correct answer is B) $2,400.

On May 1,2016,a Firm Purchased a 1-Year Insurance Policy for $3,600