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Question

Red Rock Stone purchased a one-year liability insurance policy on January 1st of this year for $3,600 and recorded it as a prepaid expense. From the selections of a. through d., select the value that would be utilized in the closing entry for insurance expense and prepaid insurance during the closing process at the end of the first fiscal period on January 31st.


$3,600

$36

$300

$360

Answer 1

$300. 3600/12=300

they are spreading the cost of the insurance out over the year by charging expense 300 per month.