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On December 31, 2020, Coolwear, Inc. had a balance in its prepaid insurance account of $63,400. During 2021, $101,000 was paid for insurance. At the end of 2021, after adjusting entries were recorded, the balance in the prepaid insurance account was $49,500. Insurance expense for 2021 was________.

Respuesta :

Answer:

Insurance expense for 2021 was $114,900.

Explanation:

This question requires us to calculate insurance expense for the year 2021. The detail about insurance amount paid during the year and prepaid insurance is also given in the question.

The prepaid expense means the amout paid in advance for the service to be provided in next accounting period. So insurance expense for the year will be calculated as follow.

opening prepaid insurance expense     $ 63,400

insurance payments                                 $101,000

closing prepaid insurance expense        ($ 49,500)

Insurance expense                                   $114,900