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Hi guys, need some help with journal entries questions
A company has annual premiums are $12,000 for the period covering Jan 1, 2014- Dec 31, 2014
For Jan 2014 close, assuming no invoice was recorded by AP, what entries are needed prior to closing the month of January?
I have:
DR: Insurance Expense $1,000
CR: Accrued Liabilities $1,000
DR: Prepaid Insurance $12,000
CR: Accounts payable $12,000
For Feb 2014 close, AP recorded and paid 50% of annual premiums
question: what entry would have been recorded in GL when AP entered the invoice?
I have:
DR: Insurance Expense $1,000
CR: Prepaid Insurance $1,000
A/P- no entries
Please let me know if I’m wrong, thanks
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