If insurance expense is $5,000 and the beginning and ending Prepaid Insurance balances are $1,000 and $1,500, respectively, cash paid for insurance is

Question

Quizplus · Accepted Answer

Since prepaid insurance balance  indicates how much of the insurance expense has been paid in advance, we need to find the difference between the beginning and ending prepaid insurance balances to determine the amount paid for insurance during the period.

Beginning prepaid insurance balance = $1,000
Ending prepaid insurance balance = $1,500
Amount used for insurance during the period = Ending balance - Beginning balance = $1,500 - $1,000 = $500

Therefore, the cash paid for insurance during the period is $5,000 - $500 = $4,500. So, the correct answer is option C.

If Insurance Expense Is $5,000 and the Beginning and Ending