Rent a Wreck,Inc.began operations on July 1,2012.On July 1,the company paid $9,600 cash in advance for a one-year insurance policy beginning on that day.What will the company report for prepaid insurance on its balance sheet at December 31,2012?

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The company paid for a one-year insurance policy on July 1, so the total prepaid insurance is $9,600. However, the balance sheet date is December 31, which means the company has used up half of the policy period (6 months). Therefore, the prepaid insurance balance will be $9,600/2 = $4,800.