[The following information applies to the questions displayed below.] On April 3

Question

[The following information applies to the questions displayed below.]

On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of $ 27,000. Coverage began immediately.

8.

value:
2.00 points

Required information

What is the amount of Insurance Expense relating to this insurance policy that will be reported for the year ended December 31, 2016?

$6,000

$3,000

$9,000

$12,000

On April 30, 2016, Rudolph Inc. purchased a three-year insurance policy with a cash payment of $ 27,000. Coverage began immediately.

Explanation / Answer

Calculation of the insurance expense for the year ended December 31, 2016 Amount = 27000 Months in the Current Year May to December = 8 27000*8/36 6000 The amount of policy for 28 months amounting $ 21000(27000-6000) will be considered as prepaid expenses Hence , the correct option is A. $ 6000

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