On January 1 the Prepaid Insurance account had a balance of $6000 that represent

Question

On January 1 the Prepaid Insurance account had a balance of $6000 that represented 6 months of advance payment. It is now the end of March and there have been no adjustments to the account balance. Determine the amount of expense to record at the end of March. On January 1 the Prepaid Insurance account had a balance of $6000 that represented 6 months of advance payment. It is now the end of March and there have been no adjustments to the account balance. Determine the amount of expense to record at the end of March.

Explanation / Answer

Calculate the amount of expense to record at the end of march:

Amount of expense to record at the end of march = 6000*3/6 = 3000

so answer is 3000

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