A company paid $9,000 for a six-month insurance policy. The policy coverage began on February 1. On February 28, $150 of insurance expense must be recorded.
Expense = $9,000/6 = $1,500

Question

Quizplus · Accepted Answer

On February 28, the insurance expense recorded should be $1,500, not $150, as the monthly expense is calculated by dividing the total policy cost by the number of months (i.e., $9,000/6).

A Company Paid $9,000 for a Six-Month Insurance Policy