On December 31, 2012, Coolwear, Inc. had a balance in its prepaid insurance account of $48,400. During 2013, $86,000 was paid for insurance. At the end of 2013, after adjusting entries were recorded, the balance in the prepaid insurance account was 42,000. Insurance expense for 2013 would be:

Question

Quizplus · Accepted Answer

We can use the formula:

Insurance expense = Beginning balance of prepaid insurance + Insurance payments made during the year - Ending balance of prepaid insurance

Plugging in the given values, we get:

Insurance expense = $48,400 + $86,000 - $42,000
Insurance expense = $92,400

Therefore, the answer is option D, $92,400.