Under Bart Company's accounting system,all insurance premiums paid are debited to prepaid insurance.For interim reports,Bart makes monthly estimated charges to insurance expense with credits to prepaid insurance.Additional information for the year ended December 31,2014 is as follows: Prepaid insurance at December 31, 2013 $ 310 , 000 Charges to insurance expense during 2014, including a year-end adjustment of $ 50 , 000 975 , 000 Unexpired insurance premiums at December 31, 2014 265 , 000 \begin{array}{lc} ext { Prepaid insurance at December 31, 2013 } & \$ 310,000 \ ext { Charges to insurance expense during 2014, including a year-end } & \\quad ext { adjustment of } \$ 50,000 & 975,000 \ ext { Unexpired insurance premiums at December 31, 2014 } & 265,000\end{array} Prepaid insurance at December 31, 2013 Charges to insurance expense during 2014, including a year-end adjustment of $50 , 000 Unexpired insurance premiums at December 31, 2014 $310 , 000 975 , 000 265 , 000 Required:What was the total amount of insurance premiums paid by Bart during 2014?

Question

Under Bart Company's accounting system,all insurance premiums paid are debited to prepaid insurance.For interim reports,Bart makes monthly estimated charges to insurance expense with credits to prepaid insurance.Additional information for the year ended December 31,2014 is as follows:  Prepaid insurance at December 31, 2013  $ 310 , 000  Charges to insurance expense during 2014, including a year-end   adjustment of  $ 50 , 000 975 , 000  Unexpired insurance premiums at December 31, 2014  265 , 000 \begin{array}{lc}	ext { Prepaid insurance at December 31, 2013 }  &  \$ 310,000 \	ext { Charges to insurance expense during 2014, including a year-end }  &  \\quad 	ext { adjustment of } \$ 50,000  &  975,000 \	ext { Unexpired insurance premiums at December 31, 2014 }  &  265,000\end{array}  Prepaid insurance at December 31, 2013   Charges to insurance expense during 2014, including a year-end   adjustment of  $50 , 000  Unexpired insurance premiums at December 31, 2014  ​ $310 , 000 975 , 000 265 , 000 ​ Required:What was the total amount of insurance premiums paid by Bart during 2014?

DANTE CUEVAS · Accepted Answer

Final Answer :   Charges to insurance expense during  2014 $ 975 , 000  - Decrease in prepaid insurance  ( $ 310 , 000 − $ 265 , 000 ) ( 45 , 000 ) ‾ =  Insurance premiums paid in  2014 $ 930 , 000 ‾ \begin{array}{lr}	ext { Charges to insurance expense during } 2014  &  \$ 975,000 \	ext { - Decrease in prepaid insurance }(\$ 310,000-\$ 265,000)  &  \underline{(45,000)} \=	ext { Insurance premiums paid in } 2014  &  \underline{\mathbf{\$ 9 3 0 , 0 0 0}}\end{array}  Charges to insurance expense during  2014  - Decrease in prepaid insurance  ( $310 , 000 − $265 , 000 ) =  Insurance premiums paid in  2014 ​ $975 , 000 ( 45 , 000 ) ​ $930 , 000 ​ ​   Feedback:The total amount of insurance premiums paid in 2014 is equal to the insurance expense for 2014 less the decline in the balance in prepaid insurance.

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