Daly Investments purchased an 18-month insurance policy on May 31, 2010 for $3,600. The December 31, 2010 balance sheet would report Prepaid Insurance of

Question

Quizplus · Accepted Answer

The insurance policy covers 18 months, costing $3,600. By December 31, 2010, 7 months have passed, so the expense is (7/18) * $3,600 = $1,400. The remaining prepaid insurance is $3,600 - $1,400 = $2,200.

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