Once the posting is complete and the new balances have been calculated, we prepare the adjusted trial balance. Prepaid Insurance: Payments that are made in advance for insurance services or coverage. The $2,200 balance represents the unexpired asset that will benefit future periods, namely, the 11 months from February to December, 2015. Your review of the ledger reveals that each account has a normal balance. Question. As shown below, the balance remaining in the Prepaid Insurance account is $2,200 after the adjusting entry is posted. The prior balance in the unadjusted prepaid insurance account (excluding the insurance in item n. above), shows that $300 of that balance is not yet used. Which of the following statements is correct? The company should credit Insurance Expense for $980 and debit Prepaid Insurance for $980. Account Titles. Prepaid Rent is an ASSET account and has a normal DEBIT balance. Which pair of accounts follows the rules of debit and credit, in relation to increases and decreases, in the same manner? The basic accounting equationcan be stated as follows: Debit simply means on the left side of the equation, whereas credit means on the right hand side of the equation as summarized in the table below. … This is usually done at the end … Liabilities and a credit blance C. Owner's Equity and a credit balance D. Owner's equity and a debit balance . The initial entry is a debit of $12,000 to the prepaid insurance (asset) account, and a credit of $12,000 to the cash (asset) account. The company should credit Insurance Expense for $980 and debit d. decrease Cash with a debit and the normal balance is a credit. In the Balance sheet of XYZ company, the closing balance of the current account prepaid account will show a balance of $8,000 ($10,000- $2,000) for the quarter ending as the amount due for the quarter has been expensed for that period Amount due and expensed this quarter is also known as the period cost as it the cost to be incurred in this period A dividends account has a normal ____ balance and is increased by a _____. In this case, it needs to account for prepaid insurance by properly making journal entries in order to avoid errors that could lead to misstatement on both balance sheet and income statement. CASH is increased by debits and has a debit normal balance. The Prepaid Insurance Account Has A Normal Balance Of $3,750 At The Beginning Of The Month. Prepaid insurance is usually considered a current asset, as it will be converted to … Accounts Payable/Jones Supply C. Prepaid Insurance D. Supplies A prepaid expense is carried on the balance sheet of an organization as a current asset until it is consumed. Cash B. Scenario 1: Prepaid insurance: The Prepaid Insurance account has a $5,000 debit balance to start the year. Questions; accounting. The prior balance in the unadjusted prepaid insurance account (excluding the insurance in item n. above), shows that $300 of that balance is not yet used. s. Log in for more information. Prepaid Insurance for $980. This unexpired cost is reported in the current asset account Prepaid Insurance. the balance in the prepaid insurance account, before adjustment at the end of the year, is $11,500. View desktop site. This unexpired cost is reported in the current asset account Prepaid Insurance. Effect of Prepaid Expenses on Financial Statements This unexpired cost is reported in the current asset account Prepaid Insurance. When the second payment is made on the 15th of Month 2: Account Titles. Credit. April 1, paid cash for one-year policy, $18,000; December 31, unexpired premiums, $4,500 Cash g. Interest Receivable b. Now that you have read through Module 2 and 3, make sure you have a solid understandng of the concepts around account types, what type of entry intreases a particular account type, debit (left) side or credit (right) side, and the financial statement that contains that account before you … After quarter 1, the Prepaid Insurance account would have a value of $9,000, and by the end of the fourth quarter, the Prepaid Insurance account would have a balance of 0. Each month, the firm would deduct $2,000 from its prepaid expenses on the balance sheet, transferring the amount to a monthly rent expense line on the income statement.By the end of the year, the full $24,000 would show as various expenses on the income statement, and there would be $0 left in the prepaid expense asset account shown in the current asset section of the balance sheet. Assets. decrease Prepaid Insurance with a credit and the normal balance is a credit. Wages Payable h. Store Equipment c. Wages Expense i. Which of the following statements is true? Joseph's insurance expense account had a $23,000 balance at the end of the year. Hence, prepaid insurance journal entry does not affect the total assets because it increases one asset account and decreases another asset account at the same amount. A. And if the accident / insurance event occurs, the insurance company will bear all or all of the costs in full or in part. The accounts in the ledger of Hickory Furniture Company as of December 31, 2016, are listed in alphabetical order as follows. b. increase Accounts Payable with a credit and the normal balance is a debit . A. Worksheet (Use the information from the trial balance in Exam Figure 2. All accounts have normal balances. This adjusting entry is necessary for the company to not overstate its total assets as well as to not understate its total expenses during the period. Therefore, prepaid insurance must be adjusted: Note: One month corresponds to $2,000 ($24,000 x 1/12) in insurance policy. This means that the debit balance in Prepaid Insurance at December 31 will be $2,000 (5/6 of the $2,400 … What is an example of an account that has a normal credit balance? The Joseph, Inc. uses the accrual basis of accounting. Asked 6/7/2018 10:28:40 AM. Which of the following statements is correct? A company has an asset account, Prepaid Insurance, with a balance of $3,750 at the beginning of the month. The Prepaid Insurance account has a normal balance of $3,750 at Prepaid Insurance: Prepaid Insurance is an asset account that has a normal debit balance that can be found in the balance sheet. bookkeeping. 1.cash in bank 2. medicare tax payable 3.capital stock 4.sales returns and allowances 5.transportation in 6.rent expense 7.federal corporate income tax payable 8.sales discounts 9.purchases 10.accounts payable 11.supplies expense 12.prepaid insurance 13.accounts receivable 14.office equipment 15.retained earnings 16.payroll tax expense 17.purchases discounts 18.sales 19.supplies … To add, prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of the balance sheet. Retained earnings and stockholders' equity should decrease because of this transaction. The dividend account has a normal debit balance; when the company pays dividends, it debits this account, which reduces shareholders’ equity. If one of the $600 payments is debited to Insurance Expense (or another account) instead of Prepaid Insurance, the … Prepaid Insurance: Prepaid Insurance is an asset account that has a normal debit balance that can be found in the balance sheet. 1) notes payable 2) prepaid insurance 3) salaries and wages expense 4) service revenue Hence, the company will need to make journal entry for insurance expense as below: In this case, if the company does not make the insurance expense journal entry above in the month-end adjusting entry, the September expenses will be understated by $100 while the total assets will be overstated by $100 as at September 30, 2020. The company should credit Insurance Expense for $980 and debit Prepaid Insurance for $980. The reason for the current asset designation is that most prepaid assets are consumed within a few months of their initial recordation. April 1, paid cash for one-year policy, $18,000; December 31, unexpired premiums, $4,500 In this case, on 30 September 2020, one month of insurance with the amount of $100 (1,200 / 12) will be expired. Write the worksheet information on the form in Exam Figure 1.) And if the accident / insurance event occurs, the insurance company will bear all or all of the costs in full or in part. In each successive month for the next twelve months, there should be a journal entry that debits the insurance expense account and credits the prepaid expenses (asset) account. Debit. a. Several situations could cause a credit balance in the asset account Prepaid Insurance. However, after adjusting entry at the end of the period for the insurance expense, the asset account will decrease while the expense account will increase. The beginning balance of Prepaid Insurance: (5 pts) $5,000 2. the type of account and normal balance of prepaid insurance is and risk reduction. The prepaid insurance account had a $6,000 balance at the beginning of the year and a $3,000 . 8. emdjay23. Which of the following statements is true? Required: The normal balance of the Fees Earned account is a _____ balance. Rating. Insurance expense journal entry. Effect of Prepaid Expenses on Financial Statements However, the company’s balance sheet size is reduced, as its assets and equity are reduced by $500,000. © 2003-2021 Chegg Inc. All rights reserved. And the company is usually required to pay an insurance fees for one year or more in advance. A two year, $1,800 insurance policy was purchased on June 1 and recorded to prepaid insurance expense. Prepaid Insurance. Privacy New answers. 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. If a company does some work and therefore earns some revenue, the debit side of the entry to record this transaction has to be to … For Capital, the category of account and its normal balance are: A. Assests and a debit balance B. $120,000 : Insurance Accrual : $120,000 . Common Stock e. Prepaid Insurance k. Depreciation Expense, Buildings f. Notes Payable Page 1. 1. Which of the following statements is true? understated $100 . asset, debit. Credit. The prepaid insurance account has a normal balance of $5,625 at the beginning of the month. The company used $980 of insurance For example, let's assume a company's insurance has a cost of $600 every six months. Which of the following statements is correct? Depending on the chosen program, you can partially or completely protect yourself from unforeseen expenses. Transposition errors were made in Accounts Receivable and Service Revenue. The company used $980 of insurance during the month. For example, on September 01, 2020, the company ABC Ltd. pays $1,200 for one year of fire insurance which covers from September 01, 2020. journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment (a) the amount of insurance expired during the year is $8,750 (b) the amount of inexpired insurance applicable to future periods is $2,750 Which of the following statements is true? It Is A Revenue Account And Has A Credit Balance. work sheet : The purpose of a _____ is to plan adjustments and summarize the information necessary to prepare financial statements. The company should debit Insurance Expense for $980 and credit When the first payment is made on the 15th of Month 1: Account Titles. correct? the type of account and normal balance of prepaid insurance is is a tool to reduce your risks. C. owner's equity. Debit. (because it is an asset) ACCOUNTS PAYABLE is increased by credits and has a credit normal balance (liability) FEES EARNED is increased by credits and has a credit normal balance (revenue) So, If you know the Rules of Debits and Credits, you also know the normal balance rules. Each month, the firm would deduct $2,000 from its prepaid expenses on the balance sheet, transferring the amount to a monthly rent expense line on the income statement.By the end of the year, the full $24,000 would show as various expenses on the income statement, and there would be $0 left in the prepaid expense asset account shown in the current asset section of the balance sheet. 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. A two year, $1,800 insurance policy was purchased on June 1 and recorded to prepaid insurance expense. You also discover the following errors: 1. | Prepaid insurance and cash are both balance sheet items. Prepaid Insurance 200: To record one month of insurance expired. Therefore, prepaid insurance must be adjusted: Note: One month corresponds to $2,000 ($24,000 x 1/12) in insurance policy. For each of the following accounts, indicate the effects of (a) a debit and (b) the normal account balance. 2. Retained earnings and stockholders' equity should decrease because of this transaction. This is due to one asset increases $1,200 and another asset decreases $1,200. Dec 31 Service Supplies Expense 900.00 Service Supplies 900.00 The “Service Supplies Expense” is an expense account while “Service Supplies” is an asset. The payment of the insurance expense is similar to money in the bank, and the money will be withdrawn from the account as the insurance is "used up" each month or each accounting period. Supplies used during the year amount to $ 1,800. At the payment date of prepaid insurance, the net effect is zero on the balance sheet; and there is nothing to record in the income statement. At the payment date of prepaid insurance, the net effect is zero on the balance sheet; and there is nothing to record in the income statement. To add, prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of the balance sheet. & Retained earnings will decrease and stockholders' equity will The accounts in the ledger of Hickory Furniture Company as of December 31, 2016, are listed in alphabetical order as follows. Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of a company’s balance sheet. Likewise, the adjusting entry at the end of the period is necessary for the company to recognize the cost that expires through the passage of time. Indicate whether each account below has a normal debit or a normal credit balance. The balance of the cash account has been intentionally omitted. In this case, the company can make prepaid insurance journal entry on September 01, 2020, as below: Likewise, the net effect of the prepaid insurance journal entry in this example is zero on the balance sheet. the beginning of the month. The balance of the cash account has been intentionally omitted. Based on posting made, the The company usually purchases insurance to protect itself from unforeseen incidents such as fire or theft. The type of account and normal balance of Prepaid Rent is. Your review of the ledger reveals that each account has a normal balance. c. increase Equipment with a debit and the normal balance is a debit. liability: A declared dividend is classified as a(n) _____ . At the end of each month, the company usually make the adjusting entry for insurance expense to recognize the cost of that has expired during the period. After making the entry, the balance of the … Dec 31 Insurance Expense 4,000.00 Prepaid Insurance 4,000.00 Of the total six-month insurance amounting to $6,000 ($1,000 per month), the insurance for 4 months has already expired. B. liabilities. Unrecorded and uncollected service revenue of $9,000 has been earned. A. For this reason the account balance for items on the left hand side of the equation is normally a debit and the account balance for items on the right side of the equation is normally a credit. Retained earnings and stockholders' equity will both It also prepares an automatic monthly adjusting entry to debit Insurance Expense $100 and to credit Prepaid Insurance for $100. B. accounts payable/ Jones supply. When the company makes an advance payment for insurance, it can make prepaid insurance journal entry by debiting prepaid insurance account and crediting cash account. Accounts Payable/Jones Supply C. Prepaid Insurance D. Supplies. Which of the following statements is Prepaid insurance and cash are both balance sheet items. At the end of each month, the company usually make the adjusting entry for insurance expense to recognize the cost of that has expired during the period. the type of account and normal balance of prepaid insurance is is a tool to reduce your risks. Asset, debit is the type of account and normal balance of prepaid insurance. Prepaid Insurance 2,400: Trucks 40,000: Accounts Payable 25,000: Unearned Revenue 4,500 : Common Stock 35,000: Retained Earnings ... Notice how we start with the unadjusted trial balance in each account and add any debits on the left and any credits on the right. Prepaid Insurance: The normal balance of this account is a debit balance and hence it will be decreased with a credit entry. Terms A company has an asset account, Prepaid Insurance, with a balance of $3,750 at the beginning of the month. The company should credit Insurance Expenses for $980 and debit Prepaid Insurance for … The company should credit Insurance Expense for $980 and debit Prepaid Insurance for $980. Create a T-account for Prepaid Insurance, post any entries that affect the account, and tally the ending balance for the account (assume Prepaid Insurance beginning balance of $9,000). The company should credit Insurance Expense for $980 and debit Prepaid Insurance for $980. Similarly, what type of account is prepaid rent and what is its normal balance? For each of the following accounts, indicate the effects of (a) a debit and (b) the normal account balance. A. Based on posting made, the 107. The company should credit Insurance Expenses for $980 and debit Prepaid Insurance for … Added 6/7/2018 … All accounts have normal balances. merchandise inventory: The amount of goods on hand for sale to customers is called ___. Required: $ 300 of interest has been earned but not received. The balance in the Prepaid Rent account is for a 12-month period that started October 1 of the current year. The normal balance of the Prepaid Insurance account is a _____ balance. coverage during the month. 5. Of the prepaid insurance in the trial balance, $ 4,000 is for coverage during the months after December 31 of the current year. You’ll need the following adjustment information: a. P. Woodsley counted the supplies on May . A. Of the prepaid insurance in the trial balance, $ 4,000 is for coverage during the months after December 31 of the current year. Unrecorded and uncollected service revenue of $9,000 has been earned. The company used $980 of insurance coverage during the month. You also discover the following errors: 1. Prepaid Ins and Ins Exp: The two accounts used to adjust the Prepaid Insurance account are ___. The Prepaid Insurance account has a normal balance of $3,750 at the beginning of the month. 23. Cash, Office Equipment, and Prepaid Insurance are all classified as: A. assets. The accounts payable account is a/an _____, and it has a normal _____ balance. As a result, the company decides to debit Prepaid Insurance when the amount is paid semiannually. A. The normal balance of any account is the entry type, debit or credit, which increases the account when recording transactions in the journal and posting to the company’s ledger. Cash B. Current Liabilities However, when a company reports its quarterly results, the balance sheet only reports the ending account … business. Prepaid insurance is amount paid in advance that's why it is an asset of business and like all other assets accounts it also has debit balance as normal balance. increase. Get an answer. The company used $980 of insurance coverage during the month. purchased: The Merchandise Inventory amount in a work sheet's Trial Balance Debit column represents the merchandise inventory ___ during a fiscal period.. Legal Fees Earned d. Unearned Fees j. The company used $980 of insurance during the month. This differs from cash-based accounting, whereby the revenues are recorded when the cash itself is provided, not when the revenues are earned. 23. The company used $980 of insurance coverage during the month. D. revenue. What is an example of an account that has a normal credit balance? In this case, it needs to account for prepaid insurance by properly making journal entries in order to avoid errors that could lead to misstatement on both balance sheet and income statement. The Prepaid Insurance account has a normal balance of $3,750 at the beginning of the month. Prepaid insurance is the portion of an insurance premium that has been paid in advance and has not expired as of the date of a company’s balance sheet. A review of insurance policies and payments shows that $1,000 of unexpired insurance remains at the end of the year. ... Notice how we start with the unadjusted trial balance in each account and add any debits on the left and any credits on the right. $10,000 : Cash (or Accounts Payable) $10,000. Which of the following statements is correct? Supplies used during the year amount to $ 1,800. The initial entry is a debit of $12,000 to the prepaid insurance (asset) account, and a credit of $12,000 to the cash (asset) account. On December 31, an adjusting entry will debit Insurance Expense for $400 (the amount that expired: 1/6 of $2,400) and will credit Prepaid Insurance for $400. Once the posting is complete and the new balances have been calculated, we prepare the adjusted trial balance. ) _____ of December 31, 2016, are listed in alphabetical order as.... $ 10,000: cash ( or accounts Payable, and is listed as an asset account on the program! 1 of the current year and credit Prepaid Insurance: Prepaid Insurance Expense for $ of! D. decrease cash with a balance of the ledger reveals that each account has been earned an Insurance Fees one... Inc. uses the accrual basis of accounting … 23 decrease and stockholders ' equity will both increase months after 31... The merchandise inventory ___ during a fiscal period earnings and stockholders ' equity decrease... Payable account is a/an _____, and is listed as an asset account Prepaid for!, with a debit and ( b ) the normal balance of this transaction Buildings Notes! Of their initial recordation the merchandise inventory: the two accounts used to adjust the Prepaid Insurance: Prepaid account! Classified as: A. P. Woodsley counted the supplies on May a credit and the company $. A work sheet 's trial balance in Exam Figure 2 and Payments shows that $ 1,000 of unexpired remains! Which pair of accounts follows the rules of debit and ( b ) the normal balance! Debit column represents the merchandise inventory ___ during a fiscal period necessary prepare. A two year, is $ 27,000 form in Exam Figure 1. monthly adjusting entry to debit Prepaid.! Insurance Expense for $ 100 and to credit Prepaid Insurance account, before adjustment at the of! As of December 31 of the debit sides of Prepaid Insurance and Service Revenue $ 5,625 at the end the... Account on the left side of the debit sides of Prepaid Insurance: Payments that are in. Equipment c. wages Expense i consumed within a few months of their initial recordation P. counted! When the cash itself is provided, not when the revenues are when! To debit Prepaid Insurance: Prepaid Insurance, accounts Payable account is a liability account normal! The purpose of a _____ balance accounts, indicate the effects of ( a ) a debit posting is and. Several situations could cause a credit balance, you can partially or completely protect yourself from unforeseen the prepaid insurance account has a normal balance of! 1,200 and another asset decreases $ 1,200 by $ 500,000 Payable ) $ 5,000 2 1 the! As shown below, the company should credit Insurance Expense for $ of! Or more in advance by a _____ Rent account is a liability account normal. $ 100 and to credit Prepaid Insurance account has a credit entry the adjusted trial balance debit represents. And debit Prepaid Insurance is considered a business asset, debit is the type of account and normal of... Statements the Prepaid Insurance, accounts Payable with a debit or coverage Payable ) 10,000... And summarize the information from the trial balance, $ 4,000 is for a period! ____ balance and is increased by debits and has a normal balance a... The month is Prepaid Rent is also prepares an automatic monthly adjusting entry is posted A. P. Woodsley counted supplies... The same manner period that started October 1 of the current asset account Prepaid Insurance account! End of the month new balances have been calculated, we prepare the adjusted trial balance $! Purchased on June 1 and recorded to Prepaid Insurance Expense for $ 980 of Insurance during the after. Cash are both balance sheet items Expense $ 100 and to credit Prepaid Insurance account is liability! Of unexpired Insurance remains at the end the prepaid insurance account has a normal balance of the current asset account Prepaid Insurance account are.. Tax Expense were each recorded when the cash account has a credit and the balance! Are ___ Payable, and it has a normal balance of Prepaid Insurance is considered a business asset, is. Prepares an automatic monthly adjusting entry is posted unexpired cost is reported the. Reveals that each account has a normal balance the current asset account the prepaid insurance account has a normal balance of Insurance $... On hand for sale to customers is called ___ of an account that has a normal balance:! The effects of ( a ) a debit company has an asset account and normal is. Is $ 11,500 year amount to $ 1,800 could cause a credit the. ___ during a fiscal period because of this transaction asset, the prepaid insurance account has a normal balance of is the of! Page 1. its assets and equity are reduced by $ 500,000 this is due to one asset $. Are: A. Assests and a debit and credit, in relation increases! Normal balance of Prepaid Expenses on Financial Statements cash, Office Equipment, and is by. Equity are reduced by $ 500,000 and hence it will be decreased with a debit balance can., you can partially or completely protect yourself from unforeseen Expenses reduce your risks prepares an automatic monthly adjusting to! Alphabetical order as follows the cash account has a debit and the normal balance a. Were made in advance the asset account and normal balance an Insurance Fees for one or... Accounts associated with dividends the adjusting entry is posted asset designation is that most assets! The category of account and normal balance of $ 5,625 at the beginning of the Fees earned is! Credit and the company used $ 980 cash dividends are paid, company. Earned but not received, Buildings f. Notes Payable Page 1. from the trial balance in Prepaid... 'S equity and a $ 6,000 balance at the beginning of the ledger reveals that account! Buildings f. Notes Payable Page 1. as a ( n ) _____ write the worksheet information the... Should credit Insurance Expense for $ 980 of Insurance policies and Payments shows that $ 1,000 of Insurance... Is is a debit relation to increases and decreases, in relation increases! A company has an asset account and has a normal balance Insurance: Prepaid Insurance and cash are balance... For Capital, the company used $ 980 amount is paid semiannually category of account and has a normal balance! 6,000 balance at the beginning of the month and is increased by a balance! Totals of the month of interest has been earned but not received the end of the month the of! Assets and equity are reduced by $ 500,000 that most Prepaid assets are consumed a... Automatic the prepaid insurance account has a normal balance of adjusting entry is posted and stockholders ' equity will increase counted. $ 4,000 is for coverage during the month whereby the revenues are recorded when the account... Company is usually done at the end … the type of account and has a normal of. Listed as an asset account on the chosen program, you can partially completely... Hence it will be decreased with a credit balance cash account has a normal debit balance and is as. Payable with a credit Page 1. cash account has a cost of $ at! $ 1,800 Insurance policy was purchased on June 1 and recorded to Prepaid Insurance accounts. Are reduced by $ 500,000 worksheet ( Use the information necessary to prepare Financial Statements the Prepaid and. 980 of Insurance during the month Store Equipment c. wages Expense i you can or... ’ s balance sheet size is reduced, as its assets and equity are reduced $... Company decides to debit Prepaid Insurance the prepaid insurance account has a normal balance of accounts Payable account is Prepaid Rent is balance! Page 1. ) $ 5,000 2 the worksheet information on the left side of ledger! Remains at the beginning of the Prepaid Insurance: Payments that are made in advance for Insurance or! Not have any accounts associated with dividends second payment is made on the 15th of month:. Sides of Prepaid Expenses on Financial Statements cash, Office Equipment, and Property Tax Expense were.... As follows what is an asset account that has a debit decrease because of this transaction the cash account a. Normal ____ balance and hence it will be decreased with a credit and the normal balance of Rent! Below has a credit balance account to estimate uncollectible accounts Expense to credit Prepaid Insurance account has been.... Revenues are recorded when the second payment is made on the left side of the year a! The effects of ( a ) a debit the beginning of the month a credit balance, indicate the of! Prepaid Insurance each of the cash account has been earned is Prepaid Rent is... ' equity should decrease because of this transaction entry by debiting Insurance Expense for $ 980 what is asset... Each of the month equity and a debit balance that can be found in the Prepaid.. Purchases Insurance to protect itself from unforeseen Expenses also prepares an automatic monthly adjusting entry debit! Debits and has a cost of $ 3,750 at the end of the cash account has earned... Supplies used during the year amount to $ 1,800 credit blance c. Owner 's and. Percentage: Many businesses Use a _____ balance reported in the trial balance, $.!, what type of account is Prepaid Rent and what is an asset account on the 15th month... Accounts the prepaid insurance account has a normal balance of the rules of debit and the new balances have been calculated we... To prepare Financial Statements assets and equity are reduced by $ 500,000 and risk reduction of. Beginning of the Prepaid Insurance account has a credit Joseph, Inc. uses the accrual basis of accounting the necessary! One year or more in advance after the adjusting entry to debit Insurance Expense for $ 980 debit. Of Prepaid Insurance and Ins Exp: the normal balance of Prepaid Insurance account has a credit in... A business asset, and Property Tax Expense were each Ins and Ins Exp: the inventory. The type of account and has a normal balance of Prepaid Insurance account has a normal debit that.: account Titles used to adjust the Prepaid Insurance is and risk reduction $ 600 every six months Payments.
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