Saved Help Save & Exit Submit Check my work Fes Company is making adjusting jour

Question

Saved Help Save & Exit Submit Check my work Fes Company is making adjusting journal entries for the year ended December 31, 2018. In developing information for the journal entries, you learned the following djusting a. A two-year insurance premium of $6,800 was paid on January 1, 2018, for coverage beginning on that date. As of December 31, points 2018, the unadjusted balances were $6,800 for Prepaid Insurance and $0 for Insurance Expense b At December 31, 2018, you obtained the following data relating to supplies eBook Unadjusted balance in Supplies on December 31, 2818 unadjusted balance in Supplies Expense on December 31, 2818 Supplies on hand, counted on December 31, 2818 $13,eee 68,eee 8,488 Print References Required: 1. Of the $6.800 paid for insurance, wha t amount should be reported on the 2018 income statement as Insurance Expense? What amount should be reported on the December 31, 2018, balance sheet as Prepaid Insurance? 2. What amount should be reported on the 2018 income statement as Supplies Expense? What amount should be reported on t December 31, 2018, balance sheet as Supplies?

Explanation / Answer

1) Insurance expense = 6800*12/24 = 3400

Prepaid insurance = 6800-3400 = 3400

2) Supplies expense = (13000-8400)+68000 = $72600

Supplies = $8400

3) Accounting equation

Assets = Liabilities + Stockholder's equity Prepaid insurance (3400) Insurance expense (3400) Supplies (4600) Supplies expense (4600)

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