Chapter $3$

Journal Entry Analysis

On October $1^{st}$ York Inc purchased a $12-$month insurance policy for $$2,400$ cash.

Prepare the journal entry to record this transaction:

Explain what is happening in this entry $($i$.$e$.$ By debiting

account I am increasing that account

and by crediting

account I am decreasing that account$)$:

Prepare the December ${31}^{st}$ adjusting journal entry to expense the prepaid insurance used up:

Explain what is happening in this entry $($i$.$e$.$ By debiting

account I am increasing that account

and by crediting

account I am decreasing that account$)$:

Prepare the T$-$Account for Prepaid Insurance: