The adjusting journal entry is done each month, and at the end of the year, when the insurance policy has no future economic benefits, the prepaid insurance balance would be 0. Effect of Prepaid Expenses on Financial Statements The initial journal entry for a prepaid expense does not affect a...
The journal entry to record amortization of prepaid rent is a debit to the rent expense account and a credit to the prepaid rent asset. The value of the entry is based on the amortization schedule for the period. The journal entry is made as part of the adjusting journal entries step in ...
This is because the initial journal entry is debited to the related account (i.e. prepaid rent or prepaid insurance) and then credited as cash. These two asset accounts leave the balance sheet unaffected. But, once the amortization schedule kicks in during each respective accounting period, ...
Prepaid expense is not a Real Account. It is a Personal Account. Was this answer useful? Yes ReplyTaha Jan 11th, 2016 Prepaid expenses are those expenses which are paid in advance to the party. Which ideally comes under Assets side in balance sheet. Journal Entry : - PP exp A/c...
They include payments for rent, insurance, supplies, equipment, and so on. A prepaid expense is an asset account that turns into an expense as the value of the asset decreases. To create a journal entry for a prepaid expense, you have to debit the prepaid expense and credit the cash acco...
Define Prepaid expense. Prepaid expense synonyms, Prepaid expense pronunciation, Prepaid expense translation, English dictionary definition of Prepaid expense. n. Deferment. American Heritage® Dictionary of the English Language, Fifth Edition. Copyrig
百度试题 题目MAKE ENTRY FOR THE FOLLOWING TRANSACTION. Prepaid insurance expense, $40,000.相关知识点: 试题来源: 解析 Prepaid insurance 40,000 Cash in Bank 40,000 反馈 收藏
Each month, an adjusting entry will be made to expense $10,000 (1/12 of the prepaid amount) to the income statement through a credit to prepaid insurance and a debit to insurance expense. In the 12th month, the final $10,000 will be fully expensed and the prepaid account will be zero...
Recording a prepaid expense is a multi-step process. The expense will be debited as an asset in a prepaid account, such as insurance or rent. It will be credited for the same amount of the full expense in the cash account, from which the payment was drawn. ...
Prepaid expenses are expenses like insurance and rent that are paid in advance, therefore before the expenses have been incurred. The entries to...Become a member and unlock all Study Answers Start today. Try it now Create an account Ask a question Our experts can answer your tough ...