Hoosher Enterprises purchased an 18-month insurance policy on May 31, 2014 for $7,200. The December 31, 2014 balance sheet would report Prepaid Insurance of:

Question

Quizplus · Accepted Answer

The insurance policy covers 18 months, costing $7,200. By December 31, 2014, 7 months have passed, so the expense is (7/18) * $7,200 = $2,800. The remaining prepaid insurance is $7,200 - $2,800 = $4,400.

Hoosher Enterprises Purchased an 18-Month Insurance Policy on May 31