Overview: The company carries insurance for accidents by Lyft drivers. There are multiple carriers. The expense is
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Question:
Overview: | |
The company carries insurance for accidents by Lyft drivers. There are multiple carriers. The expense is calculated by mileage driven or straight line, depending on the policy. | |
Mileage based policies follow a similar concept as usage based prepaid amortization - they are amortized based on monthly actual mileage driven. Straight line policies are amortized over the policy period. | |
Policy Terms: Mileage Based Policies Terms - March to February; the Straight Line Based Policies - February to January | |
Some policies require an initial prepaid balance with subsequent monthly invoices based on mileage reports provided by the company; others require installments based on an estimated annual premium. All policies have annual audits. | |
The company closes the books each month, with AP closed 5 days before month end. Periods are not re-opened once closed | |
Tasks: | |
1 | Prepare a scalable prepaid amortization schedule and an accrual schedule using the information provided below |
2 | Please show journal entry(ies) that need to be recorded as part of Sept'20 month end close |
3 | At the end of each policy identify if the company is entitled to a refund or owes the carrier and show the amount |
4 | Please show your work and list out any assumptions. No hardcoding |
Related Book For
Practical Management Science
ISBN: 978-1305250901
5th edition
Authors: Wayne L. Winston, Christian Albright
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