a-company-has-prepaid-insurance-of-12000-for-the-year-at-the-end-of-the-first-qu

Question

A company has prepaid insurance of $12,000 for the year. At the end of the first quarter, what adjusting entry should be made under both GAAP and IFRS?

Accepted Answer

Debit Insurance Expense $3,000; Credit Prepaid Insurance $3,000

Answer

Debit Insurance Expense $12,000; Credit Prepaid Insurance $12,000

Answer

Debit Prepaid Insurance $3,000; Credit Insurance Expense $3,000

Answer

No adjusting entry is needed.

A company has prepaid insurance of \$12,000 for the year. At the end of the first quarter, what adjusting entry should be made under both GAAP and IFRS?