Prepaid insurance shows a beginning balance of $500 and an ending balance of $2,800. The insurance expense account was debited during the adjusting process for $1,800. How much cash was spent for insurance?

Question

Quizplus · Accepted Answer

The cash spent on insurance can be calculated by adding the insurance expense and the increase in prepaid insurance. The increase in prepaid insurance is the ending balance ($2,800) minus the beginning balance ($500), which equals $2,300. Adding this to the insurance expense of $1,800 gives a total of $4,100 spent on insurance.

Prepaid Insurance Shows a Beginning Balance of $500 and an Ending