On January 1, 20X1, Thomas Company paid $1,000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 20X1, the financial statements should report which of the following?
$\begin{array} { l ll l }
& \text { On the Statement of Financial Position } & \text { On the Statement of Earnings } \\end{array}$
a) $\begin{array} { l ll l } & \text { Prepaid insurance, } \$ 0&&&&&&& & \text { Insurance expense, } \$ 1,000 \\end{array}$
b) $\begin{array} { l ll l } & \text { Prepaid insurance, } \$ 250 &&&&&&& \text { Insurance expense, } \$ 250 \\end{array}$
c)$\begin{array} { l ll l } & \text { Prepaid insurance, } \$ 500 &&&&&&& \text { Insurance expense, } \$ 500 \\end{array}$
d)$\begin{array} { l ll l } & \text { Prepaid insurance, } \$ 1,000 &&&&&& \text { Insurance expense, } \$ 0 \
\end{array}$

Question

On January 1, 20X1, Thomas Company paid $1,000 for a two-year insurance policy on the building. The accounting period ends December 31. At the end of 20X1, the financial statements should report which of the following?
 $\begin{array} { l ll l  } 
 & \text { On the Statement of Financial Position } & \text { On the Statement of Earnings } \\end{array}$
a) $\begin{array} { l ll l  } & \text { Prepaid insurance, } \$ 0&&&&&&& & \text { Insurance expense, } \$ 1,000 \\end{array}$
b) $\begin{array} { l ll l  } & \text { Prepaid insurance, } \$ 250 &&&&&&& \text { Insurance expense, } \$ 250 \\end{array}$
c)$\begin{array} { l ll l  } & \text { Prepaid insurance, } \$ 500 &&&&&&& \text { Insurance expense, } \$ 500 \\end{array}$
d)$\begin{array} { l ll l  } & \text { Prepaid insurance, } \$ 1,000 &&&&&& \text { Insurance expense, } \$ 0 \
\end{array}$

Quizplus · Accepted Answer

The Answer is C

On January 1, 20X1, Thomas Company Paid $1,000 for a Two-Year