Bonana Company, a U.S. clothing designer, manufacturer, and retailer, reported a balance in prepaid insurance of $24.0 million, based on its financial reports dated March 31, Year 8, the end of its fiscal year. Assume that all of this balance relates to an insurance policy with two remaining months of coverage. Assume also that on June 1, Year 8, the firm paid $156 million for a one-year renewal of this policy. Give the journal entries that Bonana would make on April 30, Year 8; May 31,Year 8; June 30, Year 8; July 31, Year 8; and June 1, Year 8, assuming that the firm closes its books monthly.
Bonana applies U.S. GAAP, and reports its results in millions of U.S. dollars.