a) Use horizontal model or prepare journal entry to record payment of one-year insurance premium of 3,000 on March 1.
b) Use horizontal model or prepare adjusting entry which will be made at the end of every month to illustrate amount of insurance premium "used" that month.
c) Compute amount of prepaid insurance which must be reported on the 31st of August balance sheet with respect to this policy.
d) If premium had been 6000 for the 2yr period, how must prepaid amount at August 31 of the 1st year is reported on balance sheet?
e) Why are prepaid expenses reflected as the asset instead of being recorded as expense in accounting period in which item is paid?