STEP 2: Insurance Prepayment

Instructions

XYZcom pays $4,800 for 12 months of insurance in July. Instead of recording the whole amount against July's expenses, show the expense equally across the periods for which the premium was paid (i.e., $400 expense in all months).

Record the insurance payment and allocate the expense equally across the 12-month period.

GL7 General Journal (showing the entire transaction)

Date	Description	Ref	Debit	Credit
31-Jul-XX
31-Jul-XX
31-Jul-XX
31-Jul-XX

6010 Insurance (showing the Insurance Expense account)

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX

1945 Pre-paid Insurance (showing the Prepaid Insurance account)

Date	Description	Ref	Debit	Credit	Balance
31-Jul-XX
31-Jul-XX

Evidence Required

Three completed tables