On January 2 2016 Bravo purchased a oneyear insurance policy

On January 2, 2016, Bravo purchased a one-year insurance policy for $4,800. On that date, Bravo debited Prepaid Insurance for $4,800. If Bravo desires to prepare financial statements at the end of March, what would be the balance in the accounts for?

Solution

Balance in Prepaid Insurance = 4800/12*9 = $3600 Balance in Insurance expense= 4800/12*3 = $1200