BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The prepaid insurance account has a debit balance of ₱3, 600 at the end of the year. If unexpired insurance at the end of the year is ₱2, 800, the amount of insurance expense that should be reported on the income statement is. ₱800.

Detailed explanation-2: -When insurance is paid in advance, it is recorded in the prepaid insurance account. When the period of insurance coverage expires, the insurance premium is recorded as an expense. So an adjusting entry is made to record an insurance expense and credit the prepaid expense account.

Detailed explanation-3: -Answer and Explanation: The prepaid insurance account is debited before adjustment by the unexpired amount as the current asset increases.

Detailed explanation-4: -As the insurance expires over time, companies debit the expense account of expired insurance and credit prepaid insurance to reduce the balance in the asset account. At the end of the insurance term, the account of prepaid insurance should have a zero balance.

Detailed explanation-5: -Prepaid Insurance Journal Entry When the asset is charged to expense, the journal entry is to debit the insurance expense account and credit the prepaid insurance account. Thus, the amount charged to expense in an accounting period is only the amount of the prepaid insurance asset ratably assigned to that period.