Sure Enuf,Inc.paid $4,800 on May 1,2012 for 12 months' insurance coverage starting May 1.How much insurance expense should appear on the company's income statement for the year ended December 31,2012?

Question

Quizplus · Accepted Answer

The insurance coverage is for 12 months starting from May 1, 2012, which means it will end on April 30, 2013. Since the question is asking for the insurance expense for the year ended on December 31, 2012, we need to calculate the portion of insurance that was used during this period. From May 1, 2012, to December 31, 2012, there are 8 months. Thus, the insurance expense for this period would be 8/12 x $4,800 = $3,200. Therefore, the correct answer is C.