Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?
A) Debit Insurance Expense and credit Prepaid Insurance for $1,750.
B) Debit Prepaid Insurance and credit Insurance Expense for $1,750.
C) Debit Insurance Expense and credit Accounts Payable for $4,200.
D) Debit Insurance Expense and credit Prepaid Insurance for $2,450.
Answer: A
At the beginning of the year, a company had a balance in its prepaid insurance account of $48,400. During the year, $86,000 was paid for insurance. At the end of the year, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense for the year would be:
A) $92,400.
B) $86,000.
C) $134,400.
D) $6,400.
Answer: A
A company purchased $270,000 in supplies during the year. The supplies account increased by $10,000 during the year to an ending balance of $66,000. For what amount was the adjusting entry to supplies expense?
A) $300,000.
B) $280,000.
C) $260,000.
D) $240,000.
Answer: C
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