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Intermediate Accounting

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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 - ,

    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 - ,

    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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