On September 1, Taggert Company paid $1,800 for a 6-month insurance premium beginning September 1. Which of the following statements are correct regarding the accounting for this i... On September 1, Taggert Company paid $1,800 for a 6-month insurance premium beginning September 1. Which of the following statements are correct regarding the accounting for this insurance over the six-month period?
Understand the Problem
The question is asking about the accounting treatment of an insurance premium paid by Taggert Company. Specifically, it requests to select all correct statements related to debiting or crediting accounts based on the insurance premium payment made on September 1, and the subsequent entries for the insurance expense over a six-month period.
Answer
1) Debit Prepaid Insurance $1,800 (Sept 1), and 4) Credit Prepaid Insurance $300 (Sept 30).
The correct statements are: 1) Taggert will debit Prepaid Insurance for $1,800 on Sept. 1, and 4) Taggert will credit Prepaid Insurance for $300 on Sept. 30.
Answer for screen readers
The correct statements are: 1) Taggert will debit Prepaid Insurance for $1,800 on Sept. 1, and 4) Taggert will credit Prepaid Insurance for $300 on Sept. 30.
More Information
On September 1, the entire insurance premium is treated as an asset and adjusted monthly to reflect expenses incurred.
Tips
Ensure to divide the total prepaid amount equally over the coverage period to correctly adjust the monthly expense.
Sources
- Correct accounting for insurance payment - Chegg - chegg.com
- Accounting for prepaid insurance - Studocu - studocu.com
AI-generated content may contain errors. Please verify critical information
