Question

On August 1, Year 1, a company paid an $18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table. Balance Sheet Prepaid Insurance Accrual Basis Cash Basis December 31, Year 1 $ 0 December 31, Year 2 0 December 31, Year 3 0 December 31, Year 4 0 0 Income Statement Insurance Expense Accrual Basis Cash Basis Year 1 $ 18,900 Year 2 0 Year 3 0 Year 4 0 Total $ 0 $ 18,900

          On August 1, Year 1, a company paid an $18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table.

Balance Sheet
Prepaid Insurance
Accrual Basis Cash Basis
December 31, Year 1 $ 0
December 31, Year 2 0
December 31, Year 3 0
December 31, Year 4 0 0

Income Statement
Insurance Expense
Accrual Basis Cash Basis
Year 1 $ 18,900
Year 2 0
Year 3 0
Year 4 0
Total $ 0 $ 18,900

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On August 1, Year 1, a company paid an 18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table.

Balance Sheet
Prepaid Insurance
Accrual Basis Cash Basis
December 31, Year 1 0
December 31, Year 2 0
December 31, Year 3 0
December 31, Year 4 0 0

Income Statement
Insurance Expense
Accrual Basis Cash Basis
Year 1 18,900
Year 2 0
Year 3 0
Year 4 0
Total 0 18,900

Added by Pilar T.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Akash M

07/26/2023

Step 1

- The total premium paid is $18,900 for 36 months. - Monthly insurance expense = $18,900 / 36 = $525. Show more…

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On August 1, Year 1, a company paid an $18,900 premium on a 36-month insurance policy for coverage beginning on that date. Refer to that policy and fill in the blanks in the following table: Balance Sheet Prepaid Insurance Accrual Basis December 31, Year 1 December 31, Year 2 December 31, Year 3 December 31, Year 4 Insurance Expense Accrual Basis Cash Basis $18,900 Year 1 Year 2 Year 3 Year 4 Total $18,900

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Transcript

00:01 So, here in a question we need to fill the blanks or given in our table.

00:07 So, let's part table in two parts.

00:10 First, we need to talk about the balance sheet.

00:15 So, in balance sheet here we talk about the prepaid insurance.

00:20 So, this is the date prepaid insurance.

00:24 This is accrual basis and this is cash basis.

00:33 So, here date will be december 31 year 1.

00:43 So, this is $11 ,950.

00:49 Accrual basis is $5 ,150 and cash basis will be $17 ,100.

00:59 December 31 year 2.

01:01 So, prepaid insurance will be $7 ,700 and accrual basis will be $5 ,150 and cash basis will be $12 ,850.

01:17 December 31 year 3.

01:21 So, prepaid insurance will be $3 ,450.

01:26 Accrual basis will be $5 ,150 and cash basis will be $8 ,500.

01:36 Now, december 31 year 4.

01:41 Prepaid insurance will be $0.

01:42 Accrual basis will be $5 ,150 and cash balance is again cash basis is $5 ,150.

01:54 So, when we talk about the total.

01:57 So, our total prepaid insurance will be $17 ,100.

02:01 So, now when we talk about the explanation.

02:06 So, we can take is at on the august year 1, the company paid premium of $17 ,100 for the 36 month...

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