Bauer Corp. purchased an insurance policy on its plant with liability for harm to its employees in the case of a catastrophe in January, 2017 and paid a five-year premium for $300,000. The whole amount was recorded as Insurance Expense. The error was discovered in early 2020 when the accountants were reconciling 2019 for adjusting entries. The books are still open in 2019. (The tax rate is 40% for all years.) Income before taxes for 2017 is $1,040,000 and 2018 is $1,220,000.
Required: Describe the steps to properly accounting for this error correction. Prepare the necessary journal entries on December 31, 2019.

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The Answer of Bauer Corp. purchased an insurance policy on its plant with liability for harm to its employees in the case of a catastrophe in January, 2017 and paid a five-year premium for $300,000. The whole amount was recorded as Insurance Expense. The error was discovered in early 2020 when the accountants were reconciling 2019 for adjusting entries. The books are still open in 2019. (The tax rate is 40% for all years.) Income before taxes for 2017 is $1,040,000 and 2018 is $1,220,000.
Required: Describe the steps to properly accounting for this error correction. Prepare the necessary journal entries on December 31, 2019.