On April 1,2014,a company paid $1,350 premium on a three-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the year ended December 31,2014?
A)$1,350.00
B)$450.00
C)$1,012.50
D)$337.50
E)$37.50

Question

Quizplus · Accepted Answer

The insurance policy is for three years, so the total premium paid is $1,350 for three years. The annual insurance expense would be $1,350/3 = $450. Since the question is asking for the expense for the year ended December 31,2014, we only need to consider the expense for one year, which is $450/3 = $337.50. Therefore, the correct answer is D.

On April 1,2014,a Company Paid $1,350 Premium on a Three-Year