The premium on a three-year insurance policy purchased on June 30, 2020, was $36,000. What is the amount of insurance expense that should be presented on the company's income statement for the year ended December 31, 2020?
A) $500
B) $1,000
C) $3,000
D) $6,000
E) $8,000

Question

Quizplus · Accepted Answer

The insurance policy covers 36 months (3 years). The monthly expense is $36,000 / 36 = $1,000. For the period from June 30 to December 31, 2020, which is 6 months, the expense is 6 x $1,000 = $6,000.

The Premium on a Three-Year Insurance Policy Purchased on June