Diane's designs purchased a one-year liability insurance policy on march 1 of a year for $3,960 and recorded it as a prepaid expense. which of the following amounts would be recorded as insurance expense during the adjusting process at the end of diane’s first month of operations on march 31?

$330 transfer from prepaid insurance expense to insurance expense

Explanation:

we can say that on 1st March

The expense would be recorded as

Prepaid insurance account debit  = $3,960

so to cash = $3,960

For prepaid insurance recorded and cash paid

and

for 1 month insurance expense will be

1 month insurance expense =

1 month insurance expense = $330

and

on 31 March

The entry will be

insurance expense account debit =  $330

so

To prepaid insurance $330

so $330 transfer from prepaid insurance expense to insurance expense

Witz Electric, Inc.

Credit sales $900,000

Estimated Bad Debts 3 % of $ 900,000= $ 27,000

From prior experience we have created an account for allowance for uncollectibles at 3 % of credit sales.

Allowance for Doubtful Accounts $27000 credit

Actual Bad Debts $ 2700  debit

Required Adjustment $ 24300 Cr in the account for allowance for uncollectibles .

September 29         Journal Entry

Bad Debts Expense $ 2700 debit

Allowance for Doubtful Accounts $2700 credit

Adjustment Entry

Allowance for Bad Debts $ 2700 Debit

Account Receivable $ 2700 Credit