On July 1,a company paid the $2,400 premium on a one-year insurance policy with benefits beginning on that date.What will be the insurance expense on the annual income statement for the current year ended December 31?
A)$1,200.
B)$2,400.
C)$1,000.
D)$400.
E)$1,400.

Question

Quizplus · Accepted Answer

The insurance expense for the current year is $1,200 because the policy covers 12 months, and by December 31, 6 months have passed. Therefore, $2,400/12 months * 6 months = $1,200.

On July 1,a Company Paid the $2,400 Premium on a One-Year