Dinosaur Junior Corporation purchased a one-year insurance policy in January 2018 for $75,000. The insurance policy is in effect from May 2018 through April 2019. If the company neglects to make the proper year-end adjustment for the expired insurance

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The insurance expense for the year 2018 should be recognized for the period from May to December, which is 8 months. The expense for these 8 months is (8/12) * $75,000 = $50,000. If no adjustment is made, the expense is not recognized, leading to an overstatement of net income and assets by $50,000.

Dinosaur Junior Corporation Purchased a One-Year Insurance Policy in January