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Show the purchase of the insurance policy

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Reference no: EM13919656

On June 1, 2013, Cole Corporation paid $8,400 to purchase a 24 month insurance policy. Assume that Cole records the purchase as an asset and that the books are closed on December 31.

Required: 

a. Show the purchase of the insurance policy and the related adjusting entry to recognize insurance expense in the accounting equation. 
b. Assume that Cole Corporation failed to record the adjusting entry to reflect the expiration of insurance. How would the error affect the company's 2013 income statement and balance sheet? 

Reference no: EM13919656

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