RE: adjusting entry
posted by Amber .
Can someone help me prepare an adjusting entry for the following>
Prepaid insurance account had 4,000 balance on December 31, 2007. An analysis of insurance policies shows that 1,200 of unexpired insurance benefits remain at December 31, 2008.
Prepaid insurance is an asset.
The adjusting entry should be
Dr Insurance expense for amount of expense
Cr Prepaid insurance for amount of expense
The original asset value was 4000 and 1200 remains, so 2800 is the amount being expensed for the period.
the building has an estimated life of 20 years