Qwerty Ltd prepaid $3600 on 1 November 2016 for a one-year insurance premium.On 1 January 2017 of the next year (after 31 December adjustments),the Prepaid insurance account will have a debit balance of:

Question

Quizplus · Accepted Answer

The prepaid insurance covers 12 months starting from November 1, 2016. By January 1, 2017, two months of insurance have been used (November and December), so the expense for these two months is $600 ($3600/12 months * 2 months). Therefore, the remaining prepaid insurance balance is $3000 ($3600 - $600).

Qwerty Ltd Prepaid $3600 on 1 November 2016 for a One-Year