Kennedy Company paid $24,000 in insurance premiums during 2019. Their financial statements showed $4,000 in prepaid insurance on its Balance Sheet as of December 31, 2018 and $6,000 on its Balance Sheet as of December 31, 2019.
Assuming all adjustments have been recorded properly, the insurance expense to be reported on the income statement for 2019 should be:

Question

Quizplus · Accepted Answer

The insurance expense for 2019 is calculated by taking the beginning prepaid insurance ($4,000), adding the premiums paid during the year ($24,000), and subtracting the ending prepaid insurance ($6,000). This results in an insurance expense of $22,000.

Kennedy Company Paid $24,000 in Insurance Premiums During 2019