Question

On December 31, 2020, Coolwear, Inc. had a balance in its prepaid insurance account of $53,400. During 2021, $91,000 was paid for insurance. At the end of 2021, after adjusting entries were recorded, the balance in the prepaid insurance account was $44,500. Insurance expense for 2021 was: Multiple Choice A.$144,400. B. $8,900. C.$99,900. D. $91,000

Answer 1

Answer:

Option "C" is the correct answer to the following statement.

$99,900

Explanation:

Given:

Balance on 31 Dec 2020 = $53,400

Opening balance on 1st Jan 2021 = $53,400

Amount paid during the year = $91,000

Closing Balance on 31 Dec 2021 = $44,500

Insurance expense for 2021 = ?

Computation:

Insurance expense for 2021 = Opening balance + Amount paid during the year - Closing balance

= $53,400 + $91,000 - $44,500

= $144,400 - $44,500

= $99,900