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By how much would profit be overstated or understated

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Problem - Sing Along Inc paid Insurance for the business for the next 9 months on 1 March 2020. The total payment amounted to $9,000. On 1 March Sing Along Ing Inc Debited the Prepaid Insurance account and credited the Cash at Bank account.

Required -

A. Give the adjusting Journal entry at 30 June for year ending 30 June 2020.

B. What amount should be reported in the 30 June 2020 Balance Sheet for Prepaid Insurance?

C. If no adjusting entry was made on 30 June 2020, by how much would profit be overstated or understated? How much would assets be overstated or understated? Explain.

D. What would your adjusting entry in requirement [A] be if the payment of $9 000 was recorded by debiting Insurance Expense?

Reference no: EM132733551

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