E2-7. Converting from accrual to cash basis expense (AICPA adapted) * * The total amount of insurance premiums paid in 2011 is equal to the insurance expense for 2011 plus the ending balance in prepaid insurance and less the beginning balance in prepaid insurance. *
2011 Insurance expense $875,000 + Ending balance in prepaid insurance 12/31/11 245,000 - Beginning balance in prepaid insurance 12/31/10 (210,000)
Insurance premiums paid in 2011 $910,000
Alternate Solution: The amount of premiums paid can be determined from a T-account analysis of prepaid insurance. Prepaid Insurance Beginning balance |
$210,000 | | | Premiums paid | X | $875,000 | Amounts charged to insurance expense | Ending balance | $245,000 | | | $210,000 + X - $875,000 = $245,000 X = $875,000 + $245,000 - $210,000 X = $910,000
E2-8. Determining Gain (loss) from discontinued operations
E2-9. Determining loss on discontinued operations Under, results of operations on an operating segment or component of an entity classified as held for sale are to be reported in discontinued operations in the