Yummy Foods purchased a two-year fire and extended coverage insurance policy on August 1, 2018, and charged the $2,760 premium to Insurance expense. At its December 31, 2018, year-end, Yummy Foods would record which of the following adjusting entries?

prepaid insurance =  $2185

Explanation:

given data

premium to Insurance = $2,760

time period = 2 year

solution

first we get here insurance expense per year that is

insurance expense =

insurance expense =

insurance expense = $1380

and here insurance expenses for the year 2018 is

insurance expenses 2018 = × 2018 period

insurance expenses 2018 = × 5

insurance expenses 2018 = $575

so

prepaid insurance is as

prepaid insurance = premium for insurance - insurance expense 2018

prepaid insurance =  2760 - 575

prepaid insurance =  $2185

as adjusting entries are

date                             account title                             debit             credit

December 31, 2018   prepaid insurance                   $2185

                                    insurance expense                                        $2185

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