Company A buys casualty insurance from Insurer Co. The insurance premium is $24,000 for the year...

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Company A buys casualty insurance from Insurer Co. The insurance premium is $24,000 for the year ($2,000 per month). Company A signs the casualty insurance policy on June 1, Year 1, for the one-year period from June 1, Year 1 through May 31, Year 2. Both Company A and Insurer Co. report on a financial year ending December 31. Both Company A and Insurer Co. record adjusting journal entries only at the end of their respective financial years. Additional Facts Fact Pattern #1: (The facts below are in addition to the General Facts, above.) Company A signs the casualty insurance policy on June 1, Year 1. Under the terms of the insurance policy, Company A is required to pay (unrealistically) its insurance premium with a single $24,000 payment at the end of the insurance policy term (i.e., May 31, Year 2). Company A pays the $24,000 insurance premiumțin cash on May 31, Year 2. Question #13. On June 1, Year 1, Company A will make an operating journal entry reflecting the following: a. Debit Insurance Expense for $24,000. O b. Credit Insurance Payable for $24,000. Debit Prepaid Insurance Expense for $24,000. d. Company A will not need to make an operating journal entry on June 1, Year 1. Question #14. Based on the prior fact pattern, on December 31, Year 1, Insurer Co. will make an adjusting journal entry reflecting the following: Oa. Credit Insurance Revenue for $24,000. O b. Credit Insurance Revenue for $14,000. O c. Credit Insurance Receivable for $14,000. O d. Insurer Co. will not need to make an adjusting journal entry on December 31, Year 1 to account for revenue earned under the insurance policy with Company A during Year 1. New Additional Facts - Fact Pattern #2: (The facts below are in addition to the General Facts, above, but not those additional facts in Fact Pattern # 1.) Company A signs the casualty insurance policy on June 1, Year 1. Under the terms of the insurance policy, Company A is required to pay (somewhat unrealistically) its insurance premium with a single $24,000 payment at the beginning of the insurance policy term (i.e., June 1, Year 1). Company A pays the $24,000 insurance premium in cash on June 1, Year 1. Question #15. On June 1, Year 1, Company A will make an operating journal entry reflecting the following: Debit Prepaid Insurance Expense for $24,000. a. O b. Debit Insurance Expense for $24,000. O c. Debit Cash for $24,000. d. Company will not need to make an operating journal entry on June 1, Year 1. Question #16. On December 31, Year 1, Insurer Co. will make an adjusting journal entry reflecting the following: a. Credit Insurance Revenue for $24,000. O b. Debit Prepaid Insurance Revenue for $14,000. Oc. Credit Insurance Receivable for $14,000. d. Insurer Co. will not need to make an adjusting journal entry on December 31, Year 1 to account for revenue earned under the insurance policy with Company A during Year 1. Company A buys casualty insurance from Insurer Co. The insurance premium is $24,000 for the year ($2,000 per month). Company A signs the casualty insurance policy on June 1, Year 1, for the one-year period from June 1, Year 1 through May 31, Year 2. Both Company A and Insurer Co. report on a financial year ending December 31. Both Company A and Insurer Co. record adjusting journal entries only at the end of their respective financial years. Additional Facts Fact Pattern #1: (The facts below are in addition to the General Facts, above.) Company A signs the casualty insurance policy on June 1, Year 1. Under the terms of the insurance policy, Company A is required to pay (unrealistically) its insurance premium with a single $24,000 payment at the end of the insurance policy term (i.e., May 31, Year 2). Company A pays the $24,000 insurance premiumțin cash on May 31, Year 2. Question #13. On June 1, Year 1, Company A will make an operating journal entry reflecting the following: a. Debit Insurance Expense for $24,000. O b. Credit Insurance Payable for $24,000. Debit Prepaid Insurance Expense for $24,000. d. Company A will not need to make an operating journal entry on June 1, Year 1. Question #14. Based on the prior fact pattern, on December 31, Year 1, Insurer Co. will make an adjusting journal entry reflecting the following: Oa. Credit Insurance Revenue for $24,000. O b. Credit Insurance Revenue for $14,000. O c. Credit Insurance Receivable for $14,000. O d. Insurer Co. will not need to make an adjusting journal entry on December 31, Year 1 to account for revenue earned under the insurance policy with Company A during Year 1. New Additional Facts - Fact Pattern #2: (The facts below are in addition to the General Facts, above, but not those additional facts in Fact Pattern # 1.) Company A signs the casualty insurance policy on June 1, Year 1. Under the terms of the insurance policy, Company A is required to pay (somewhat unrealistically) its insurance premium with a single $24,000 payment at the beginning of the insurance policy term (i.e., June 1, Year 1). Company A pays the $24,000 insurance premium in cash on June 1, Year 1. Question #15. On June 1, Year 1, Company A will make an operating journal entry reflecting the following: Debit Prepaid Insurance Expense for $24,000. a. O b. Debit Insurance Expense for $24,000. O c. Debit Cash for $24,000. d. Company will not need to make an operating journal entry on June 1, Year 1. Question #16. On December 31, Year 1, Insurer Co. will make an adjusting journal entry reflecting the following: a. Credit Insurance Revenue for $24,000. O b. Debit Prepaid Insurance Revenue for $14,000. Oc. Credit Insurance Receivable for $14,000. d. Insurer Co. will not need to make an adjusting journal entry on December 31, Year 1 to account for revenue earned under the insurance policy with Company A during Year 1.

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ANSWER 13 THE CORRECT ANSWER IS OPTION D ie COMPANY A NOT NEED TO MAKE AN ... View the full answer