The adjusting journal entry for Prepaid Insurance is: Note that the ending balance in the asset Prepaid Insurance is now $600—the correct amount of insurance that has been paid in advance. The income statement account Insurance Expense has been increased by the $900 adjusting entry. It is ass...
No benefit can be credited to the business without recording its associated cost. In the case of a deferred expenselike prepaid insurance,an adjusting journal entry is made during each of the affected accounting periods to accurately record what the monthly cost of the premium would be. This is...
Adjusting entries always involve a balance sheet account (Interest Payable, Prepaid Insurance,Accounts Receivable, etc.) and income statement account (InterestExpense, Insurance Expense, Service Revenues, etc.). Entries are made with thematching principleto matchrevenueand expenses in the period in whic...
When expenses are prepaid, a debit asset account is created together with the cash payment. The adjusting entry is made when the goods or services are actually consumed, which recognizes the expense and the consumption of the asset. Prepaid insurance premiums and rent are two common examples of ...
The journal entry made at the time of payment would be similar to the following: Journal Entry for Prepaid Insurance Date Accounts Debit Credit mm/dd Prepaid Insurance xxxx.xx Cash xxxx.xx In the next period when the insurance coverage is in effect, one makes the following adjusting entry: ...
Here are the main financial transactions that adjusting journal entries are used to record at the end of a period. Prepaid expenses or unearned revenues– Prepaid expenses are goods or services that have been paid for by a company but have not been consumed yet. Insurance is a good example ...
The adjusting entry for prepaid expenses includes: A debit to the expense account (insurance expense, for example) A credit to prepaid expense account previously recorded. The other deferral in accounting isthe deferred revenue,which is an adjusting entry that converts liabilities to revenue. ...
The basic journal entry for depreciation is to debit the Depreciation Expense account (which appears in the income statement) and credit the Accumulated Depreciation
It is a) true that an adjusting entry is required to recognize an expired expense. A common prepaid expense adjusted in this manner is insurance...Become a member and unlock all Study Answers Start today. Try it now Create an account Ask a question Our experts...
An adjusting journal entry involves anincome statementaccount (revenue or expense) along with abalance sheetaccount (asset or liability). It typically relates to the balance sheet accounts for accumulated depreciation,allowance for doubtful accounts,accrued expenses,accrued income,prepaid expenses,deferred ...