Homework Help: Intermediate Accounting

Posted by Kim on Tuesday, January 25, 2011 at 12:12pm.

I am having a hard time calculating this my question is On April 1, 2011, the company paid an insurance company $4,000 for a two-year fire insurance policy. The entire $4,000 was debited to insurance expense.
How do I calculate?

Intermediate Accounting - helper, Tuesday, January 25, 2011 at 1:00pm
Your question isn't clear.

Calculate what?

Do you need to calculate the portion of insurance that is a current expense for the year 2011 and the portion that is a prepaid expense or prepaid asset?

4000/2 = 2000. = 1 year expense
2000./12 = monthly expense for 1 year
Jan 2011 - Mar 31, 2011 = 3 month x monthly amount

Above is without knowing what you need to calculate.
Intermediate Accounting - Linda, Monday, May 2, 2011 at 1:44pm
Purchased dental equipment on January 1 for $80,000, paying $20,000 in cash and signing a $60,000, 3-year note payable. The equipment depreciates $400 per month. Interest is $500 per month

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