Daly Investments purchased an 18-month insurance policy on May 31, 2014 for $6,300. The December 31, 2014 statement of financial position would report Prepaid Insurance of

Question

Quizplus · Accepted Answer

The insurance policy covers 18 months, costing $6,300. By December 31, 2014, 7 months have passed, so the expense for these months is (7/18) * $6,300 = $2,450. The remaining prepaid insurance is $6,300 - $2,450 = $3,850.

Daly Investments Purchased an 18-Month Insurance Policy on May 31