Adjusting Entry for Prepayments (ASSET METHOD AND EXPENSE METHOD)

Adjusting Entry for Prepayments

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Problems solved in the video:

On August 1, 2018, a P18,000 premium was paid on a one-year policy. Prepare the adjusting entry for the year ended December 31, 2018.

 The payment of the P19,000 insurance premium for two years in advance was originally recorded as Prepaid Insurance. One year of the policy has now expired. Prepare the adjusting entry for the year ended December 31, 2016.

 The payment of the P19,000 insurance premium for two years in advance was originally recorded as Insurance Expense. One year of the policy has now expired. Prepare the adjusting entry for the year ended December 31, 2016.

 Paid P24,000 for a 1-year fire insurance policy to commence on September 1. The amount of premium was debited to Prepaid Insurance. Prepare the adjusting entry for the year-ended December 31, 2016

 On June 1, 2017, Lacerna Company paid for a one-year insurance in the amount of P24,000. It was recorded as debit to Prepaid Insurance and credit to cash. Record the necessary adjusting entry for the month.

 On June 1, 2017, Lacerna Company paid for a one-year insurance in the amount of P24,000. It was recorded as debit to Insurance Expense and credit to cash. Record the necessary adjusting entry for the month.

 On October 1, 2019, ABM Company acquired a 3-year insurance policy for P36,000 paid in advanced. Prepare the adjusting entry for the year ended, December 31, 2019.

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