BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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debit to Prepaid Insurance and a credit to Cash for $2, 640.
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debit to Prepaid Insurance and a credit to Insurance Expense for $275.
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debit to Insurance Expense and a credit to Prepaid Insurance for $220.
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debit to Insurance Expense and a credit to Cash for $220.
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Detailed explanation-1: -Answer and Explanation: Explanation: A purchase of supplies on account is recorded as a debit to supplies expense and a credit to accounts payable.
Detailed explanation-2: -A basic insurance journal entry is Debit: Insurance Expense, Credit: Bank for payments to an insurance company for business insurance. Not all insurance payments (premiums) are deductible* business expenses. Some insurance payments can go on to the Profit and Loss Report and some must go on the Balance Sheet.
Detailed explanation-3: -Create Journal Entries Debit the supplies expense account for the cost of the supplies used. Balance the entry by crediting your supplies account. For example, if you used $220 in supplies, debit the supplies expense for $220 and credit supplies for an equal amount.
Detailed explanation-4: -Accounting for Office Supplies When supplies are purchased, the amount will be debited to Supplies. At the end of the accounting period, the balance in the account Supplies will be adjusted to be the amount on hand, and the amount of the adjustment will be recorded in Supplies Expense.