Boston Corporation purchased two insurance policies during the current year. On February 1, 2018 the company purchased a two-year liability policy for $18,000. On May 1, 2018 it purchased a one year automobile policy for $7,200. These payments were charged to insurance expense. Boston Company has a fiscal year end of June 30.
Required:
1. How much insurance expense should be recognized from these policies on June 30, 2018?
2. What adjusting entry will be required on June 30, 2018?

Question

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The Answer of Boston Corporation purchased two insurance policies during the current year. On February 1, 2018 the company purchased a two-year liability policy for $18,000. On May 1, 2018 it purchased a one year automobile policy for $7,200. These payments were charged to insurance expense. Boston Company has a fiscal year end of June 30.
Required:
1. How much insurance expense should be recognized from these policies on June 30, 2018?
2. What adjusting entry will be required on June 30, 2018?

Boston Corporation Purchased Two Insurance Policies During the Current Year