Goodfellow Corporation reported insurance expense of $477 for the current year. The beginning and ending balances in the prepaid insurance account were $50 and $30, respectively. What was the amount of cash paid for insurance?

Question

Quizplus · Accepted Answer

To find the amount of cash paid for insurance, we need to calculate the change in the prepaid insurance account.

Beginning balance in prepaid insurance = $50 
Ending balance in prepaid insurance = $30

Change in prepaid insurance = Ending balance - Beginning balance 
= $30 - $50 
= -$20

The negative value indicates a decrease in the prepaid insurance account, which means insurance was expensed during the current year.

Insurance expense reported = $477

Cash paid for insurance = Insurance expense + Change in prepaid insurance 
= $477 - $20 
= $457

Therefore, the answer is B) $457.

Goodfellow Corporation Reported Insurance Expense of $477 for the Current