Essay on Expense and Prepaid Insurance
C. Prepaid insurance $2,400, and Insurance expense $2,400.
D. Prepaid insurance $4,200, and Insurance expense $600.
Explanation: $4,800/24 = $200 per month. Three months have been used (Oct, Nov, and Dec) so $200 * 3 = $600. This $600 needs to be recorded as the expense and the balance in prepaid insurance is $4,800 - $600 = $4,200.
8. Which of the following is not reported as an operating expense on the income statement?
A. Salaries expense.
B. Rent expense.
C. Interest expense.