On April 1, 2014, Briggs Corp. purchases a 24-month property insurance policy for $72,000. The policy is effective immediately. Assume that Briggs prepares adjustments only once a year, on December 31.

Required:

1. Compute the monthly cost oldie insurance policy.
2. Identify and analyze the transaction to record the purchase of the policy on April 1, 2014.
3. Identify, and analyze the adjustment on December 31, 2014.
4. Assume that the accountant forgets to record an adjustment on December 31, 2014. Will net income for the year ended December 31, 2014, be understated or overstated? Explain.

Answer rating: 100% (QA)

1 Computing the monthly cost of insurance policy Total Premium paid 72000 Period of Coverage 24 Mont... View the full answer