On 30 June 2023, before any year-end adjustments, Heaven Felt’s Insurance Expense account had a balance of $800 and its Prepaid Insurance account had a balance of $2,900. It was determined that $1,350 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be:
The adjusted balance for Insurance Expense for the year would be calculated as follows:
Original Insurance Expense balance: $800 Expired portion of Prepaid Insurance: $1,350
Since the expired portion of prepaid insurance represents an additional insurance expense for the year, it needs to be added to the original Insurance Expense balance.
Adjusted Insurance Expense balance = Original Insurance Expense balance + Expired portion of Prepaid Insurance Adjusted Insurance Expense balance = $800 + $1,350 Adjusted Insurance Expense balance = $2,150
Therefore, the adjusted balance for Insurance Expense for the year would be $2,150.
