Statement of Cash flows Non-cash Not Reported Investing & on Statement Operating Investing Financing Financing or in Notes Activities Activities Activities A. Declared and paid a cash dividend X B. Recorded depreciation expense X C. Paid cash to settle long-term note payable XD. Prepaid expenses increased in the year X E. Accounts receivable decreased in the year X F. Purchased land by issuing common stock X G. Inventory increased in the year XH. Sold equipment for cash, yielding a loss XI. Accounts payable decreased in the year X J. Income taxes payable increased in the year XIndicate where each item would appear on a statement of cash flows using the indirect method by placing an X in the appropriate column(s).
Answers
Answer and Explanation:
The classification is shown in the attachment. Please find the attachment below:
As we know that
Operating activities refers to the activities in which the changes with respect to the working capital is recorded
Investing activities refers to those activities in which the purchase and sale of long term assets are recorded
And, the last one is financing activity which deals with the stockholder equity account i.e issuance of the stock, cash dividend paid, etc
Related Questions
A corporation issued 7000 shares of its $10 par value common stock in exchange for land that has a market value of$82,000. The entry to record this transaction would include:_______
a) A credit to Land for $70,000.
b) A debit to Land for $7oooo.
c) A credit to common stock for $82,000.
d) A debit to Common Stock for $70,000.
e) A credit to Contributed Capital in Excess of Par value. Common Stock for $12,000.
Answers
Answer:
Option e is the correct answer.
Explanation:
The issuance of common stock in exchange of land would mean a debit to the asset account for land at the market value for the land which is $82000. The other side of the transaction would contain two accounts- a credit to the Common Stock account and a credit to the Paid in/Contributed Capital in excess of Par value, Common Stock.
The value of Common Stock will be = 7000 * 10 = 70000
The remaining of 82000 - 70000 = 12000 will be credited to the contributed capital in excess of par value account.
The entry to record this transaction will be,
Land 82000 Dr
Common Stock 70000 Cr
Contributed Capital in excess of par value-Common Stock 12000 Cr
A major expenditure made to equipment that extends its useful life beyond the original estimate is journalized by
Answers
Answer:
Debit : Equipment and Credit : Cash
Explanation:
Major expenditure made to equipment that extends its useful life meets the definition and recognition criteria of assets.
The definition and recognition criteria of assets read as follows in the conceptual framework : Definition - An Asset is an economic resource that is controlled by the entity as a result of a past event from which economic benefits are expected to flow into the entity.
The major expenditure, will ensure further flow of economic benefits into the entity beyond the estimated useful life. Hence the cost is capitalized, included in the cost of the asset.
Give at least one example that you believe demonstrates when the cost of government actions outweighs the benefits.
Answers
Answer: The creation of a government set price for gasoline by ni government.
Explanation:
In 1970 president Nixon inteoduced a soft artificial price ceiling on gasoline in the United States. This was as a result of the OPEC crisis of 1970s. It is a good example of scenerios where the cost of government action outweighs the benefits. this was due to the creation of the government-set price which would cause the quantity demanded to be more than the quantity supplied because gasoline was cheaper now.
Assume that markets are not efficient and that you will earn the average return of an active investor if you pick stocks. How should you choose between active and passive investments and why
Answers
Answer with Explanation:
If the markets are not efficient then there higher probability that the investor can earn from the price fluctuations because the markets are not valuation is different. The investor would be spending money on gaining the benefit of price fluctuations which will be for short term only and he will be acting in time to continuously earn money from the fluctuation.
The investors and financial institutions will master the quantitative analysis and qualitative analysis of the price changes to guess where will be the change going to happen and we must take advantage of it.
The passive investment is the investment which the management intents to hold for a longer period to benefit from it. If the markets are not efficient then it is useless to hold an passive investment. Rather holding a passive investment it would be better to hold an active investment which benefit more as we will be beating the market by price differences. The possession of passive investment is less expensive as apposed to active investments because less fee is charged by the broker. Active investment would be risky investment because we will continuously gaining and loosing money.
The financial advisers opt to creating a portfolio of active and passive investments to lower the unsystematic risk and increase the gain limit to average return.
The techniques used by systems analysts to identify or extract system problems and solution requirements are known as
Answers
Answer: requirements discovery
Explanation:
The techniques used by systems analysts to identify or extract system problems and solution requirements are known as requirements discovery.
A requirements discovery is simply defined as the process and tools that are typically used to identify the system requirements for the users of a system that has been proposed.
A system requirement helps to describe the desires and needs for an application or a system. The system requirement describes the features, functions, and constraints.
Economic conditions are a ______ predictor of U.S. presidential election outcomes. a. fair b. poor c. volatile d. good
Answers
Answer: d. good
Explanation:
Economic conditions in the U.S. directly affect the citizenry and so they will act to vote for a person who will either bring about better conditions if conditions are currently bad, or the incumbent if conditions are good.
If economic conditions are not so great, the person who will be voted for is probably the person who promised more to the people in the way of combating the poor economic performance.
So yes, economic conditions are a good predictor of U.S. presidential election outcomes.
Brickhouse is expected to pay a dividend of $3.15 and $2.46 over the next two years, respectively. After that, the company is expected to increase its annual dividend at 3.9 percent. What is the stock price today if the required return is 11.3 percent?
Answers
Answer: $32.70
Explanation:
According to the dividend discount model, the value of the stock today is the present value of the dividends to be paid plus the present value of the value of the dividend from when the company starts maintaining a stable growth rate which in this question in year 2.
= (Year 1 Dividend / ( 1 + r)) + (Year 2 Dividend / ( 1 + r)²) + (value at year 2 / ( r - g))
Value at year 2 = Year 3 dividend / ( required return - growth rate)
= ( Year 2 dividend * (1 + g)) / ( required return - growth rate)
= (2.46* ( 1 + 0.039)) / ( 0.113 - 0.039)
= $34.54
Value today = (Year 1 Dividend / ( 1 + r)) + (Year 2 Dividend / ( 1 + r)²) + (value at year 2 / ( r - g))
= 3.15/1.113 + 2.46/1.113² + 34.54/1.113²
= 2.83 + 1.99 + 27.88
= $32.70
The Soda Pop Shoppe has adopted a policy of increasing its annual dividend at a constant rate of 1.35 percent annually. The company just paid its annual dividend of $1.84. What will the dividend be nine years from now
Answers
Answer:
$2.08
Explanation:
Calculation for what will the dividend be nine years from now
Using this formula
Dt-1=Div1(1+g)^t
Where,
Dt-1=9years-1
Div1=$1.84
(1+g)=(1+0.0135
t= 9 years
Let plug in the formula
D9-1= $1.84(1+0.0135)^9
D8=$1.84(1.0135)^9
D8=$1.84(1.1282)
D8 = $2.08
Therefore what will the dividend be nine years from now will be $2.08
The net sales of department X were 46,780. the customer returns were 2,342. What were gross sales?
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Answer:gross sales=49,122
Explanation: Gross sales is defined as the sum of all the values of a sales receipts for a company. The formula to calculate gross sales is given as –
Gross sales= Net Sales + Discount + Sales returns + Sales allowances
Given that
net sales of department X =46,780
the customer returns were 2,342.
Gross sales for department X = Net sales + Sales Return
46,780 + 2,342.=49,122
A company purchased equipment and signed a 6-year installment loan at 8% annual interest. The annual payments equal $9,400. The present value of an annuity factor for 6 years at 8% is 4.6229. The present value of a single sum factor for 6 years at 8% is .6302. The present value of the loan is:_________.
a. $9,400.
b. $5,924.
c. $14,916.
d. $56,400.
e. $43,455.
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Answer: e. $43,455
Explanation:
Annual payments are constant so this is an annuity. To calculate the present value of an annuity, multiply the annity by the present value of an annuity factor corresponding with its discount rate and number of periods.
Present value of loan = 9,400 * present value of an annuity factor, 6 years, 8%
= 9,400 * 4.6229
= $43,455.26
= $43,455
A furniture manucturer specializes in wood tables. The tables sell for per unit and incur per unit in variable costs. The company has in fixed costs per month. The company desires to earn an operating profit of per month.
1. Calculate the required sales in units to earn the target profit using the equation method.
2. Calculate the required sales in units to earn the target profit using the contribution margin method.
3. Calculate the required sales in dollars to earn the target profit using the contribution margin ratio method.
4. Calculate the required sales in units to break even using the contribution margin method.
Answers
Answer:
1. 100 units
2. 300 units
3. $30,000
4. 100 units
Explanation:
Note: This question is not complete. The complete question is therefore provided before answering the question as follows:
A furniture manufacturer specializes in wood tables. The tables sell for $100 per unit and incur $40 per unit in variable costs. The company has $6000 in fixed costs per month. The company desires to earn an operating profit of $12000 per month.
1. Calculate the required sales in units to earn the target profit using the equation method.
2. Calculate the required sales in units to earn the target profit using the contribution margin method.
3. Calculate the required sales in dollars to earn the target profit using the contribution margin ratio method.
4. Calculate the required sales in units to break even using the contribution margin method.
The explanation to the answers is now given as follows:
1. Calculate the required sales in units to earn the target profit using the equation method.
This can be calculated using the following formula:
Target profit = Net sales revenue - Total variable cost - Total fixed cost ....... (1)
Where, by letting q denotes quantity sold;
Target profit = $12,000 per month
Net sales revenue = Selling price per unit * quantity sold = $100 * q = 100q
Total variable cost = Variable cost per unit * quantity sold = $40 * q = 40q
Total fixed cost = $6,000 per month
Substituting the values into equation (1) and solve for q, we have:
$12,000 = $100q - $40q - $6,000
$12,000 - $6,000 = $60q
$6,000 = $60q
q = $6,000 / $60
q = 100 units.
2. Calculate the required sales in units to earn the target profit using the contribution margin method.
Contribution margin per unit = Selling price per unit – Variable cost per unit = $100 - $40 = $60
Required sales in units to earn the target profit = (Fixed cost + Target profit) / Contribution margin per unit = ($6,000 + $12,000) / $60 = $18,000 / $60 = 300 units
3. Calculate the required sales in dollars to earn the target profit using the contribution margin ratio method.
Contribution margin ratio = Contribution margin / Selling price per unit = $60 / $100 = 0.60, or 60%
Required sales in dollars to earn the target profit = (Fixed cost + Target profit) / Contribution margin ratio = ($6,000 + $12,000) / 0.60 = $18,000 / 0.60 = $30,000
4. Calculate the required sales in units to break even using the contribution margin method.
Sales in units to break even = Fixed cost / Contribution margin per unit = $6,000 / $60 = 100 units
A project that costs $23,500 today will generate cash flows of $9,300 per year for seven years. What is the project's payback period?
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Answer:
It will take 3 years and 192 days to cover for the initial investment.
Explanation:
Giving the following information:
Initial investment= $23,500
Cash fow= $9,300
Time period= 7 years
The payback period is the time required to cover for the initial investment.
Year 1= 9,300 - 23,500= - 14,200
Year 2= 9,300 - 14,200= - 4,900
Year 3= 9,300 - 4,900= 4,400
To be more accurate:
(4,900/9,300)*365= 192
It will take 3 years and 192 days to cover for the initial investment.
uan and Rita are having trouble with new employees Peters and Jackson, indicating which of the four targeted areas of change is most needed?
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Answer:
Changing people
Explanation:
The targeted area of change mostly needed is change in people. The idea here is to change attitude, motivation and effect new behaviors. Since Juan and Rita are having problems with the new employees the targeted area that they need mostly is changing people. As this aspect would bring about a resolution to the issues they are having with the new employees.
Chambliss Corp.'s total assets at the end of last year were $305,000 and its EBIT was 62,500. What was its basic earning power (BEP)
Answers
Answer:
20.49%
Explanation:
Chamblis corporation has a total assets of $305,000
The EBIT is $62,500
Therefore the basic earning power can be calculated as follows
= $62,500/$305,000
= 0.2049×100
= 20.49%
Hence the basic earning power is 20.49%
The management of Heider Corporation is considering dropping product J14V. Data from the company's accounting system appear below:
Sales: $980,000
Variable expenses: $394,000
Fixed manufacturing expenses: $376,000
Fixed selling and administrative expenses : $256,000
In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $245,000 of the fixed manufacturing expenses and $206,000 of the fixed selling and administrative expenses are avoidable if product J14V is discontinued. What would be the effect on the company's overall net operating income if product J14V were dropped?
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Answer:
financial disadvantage of dropping product J14V = $135,000, so net operating income would decrease by that amount
Explanation:
net loss generated by product J14V = $980,000 - $394,000 - $376,000 - $256,000 = ($46,000)
unavoidable fixed costs:
Fixed manufacturing expenses = $376,000 - $245,000 = $131,000
Fixed selling and administrative expenses = $256,000 - $206,000 = $50,000
total unavoidable fixed costs = $181,000
the overall effect = total unavoidable fixed costs - net loss = $181,000 - (-$46,000) = $135,000 financial disadvantage since unavoidable costs are higher than current losses
To achieve the social optimum,the government could set a tax equal to ________ per unit sold.
A) $6
B) $4
C) $2
D) $3
E) $5
Answers
Answer:
A) $6
Explanation:
The equilibrium price arises when the marginal cost of private i.e. demand is $12 and when the social production cost is to be considered then the equilibrium price is $18
So, to accomplish the social optimum, the government should set a tax of
= $18 - $12
= $6
This shifted the private marginal cost to the left and there is yield to the social optimum
Hence, the correct option is A. $6
Lloyd Inc. had sales of $200,000, a net income of //415,000, and the following balance sheet:
Cash $10,000 Accounts Payable $30,000
Receivables 50,000 Notes Payable To Bank 20,000
Inventories 150,000 Total Current Liabilities $50,000
Total Current Assets $210,000 Long-Term Debt 50,000
Net Fixed Assets 90,000 Common Equity 200,000
Total Assets $300,000 Total Liabilities And Equity $300,000
The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry average, 2.5x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2.5x); if the funds generated are used to reduce common equity (stock can be repurchased at book value); and if no other changes occur, by how much will the ROE change? What will be the firm’s new quick ratio?
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Answer:
The firm's new quick ratio is 2.9
Explanation:
The current ratio is calculated as
Current ratio = Current assets / Current liabilities
2.5 times = (Cash + receivables + Inventories ) / (Accounts payable + Other current liabilities)
2.5 = ($10,000 + $50,000 + Inventories) / $50,000
$60,000 + inventories = $125,000
Inventories = $65,000
Therefore, $85,000 worth of inventories were sold off.
If the funds generated are used to reduce the common equity that is by repurchasing the equity at book value.
Hence, the common equity amounts to $115,000
Calculating the ROE before the inventory is sold off:
ROE = Net income / Stockholder's equity
= $15,000 / $200,000
= 0.075 or 7.5%
Calculating the ROE after selling off the inventory:
ROE = $15,000 / $115,000
= 0.13 or 13%
The firm's new quick ratio is
Quick ratio = (Current assets - Inventories) / Current liabilities
= ($210,000 - $65,000) / $50,000
= 2.9
Currently Baldwin is paying a dividend of $16.58 (per share). If this dividend were raised by $3.64, given its current stock price what would be the Dividend Yield? Select: 1Save Answer $20.22 8.9% $3.64 10.9%
Answers
Information Missing was:
Stock Market Summary
Company Close Change Shares MarketCap ($M) Book Value EPS Dividend Yield P/E
Andrews $1.00 $0.00 2,461,289 $2 $19.10 ($10.20) $0.00 0.0% -0.1
Baldwin $203.72 $73.28 1,908,475 $389 $63.83 $28.01 $19.85 9.7% 7.3
Chester $35.32 $9.33 3,490,508 $123 $26.71 $2.27 $2.39 6.8% 15.6
Digby $49.20 $9.01 3,149,499 $155 $36.95 $3.17 $0.86 1.7% 15.5
Answer:
11.5%
Explanation:
The dividend yield of Baldwin Co can be calculated by using the following formula:
Dividend Yield = (Current Dividend + Increase in Dividend) / Current Stock Value
Here
Current Dividend is $16.58 per share
Dividend Increase is $3.64 per share
Current Stock Value is $203.72
By putting values we have:
Dividend Yield = ($16.58 - $3.64) / $203.72
Dividend Yield = $23.49 per share / $203.72
Dividend Yield = 11.5%
The net income available to stockholders is $230,000. The beginning number of common shares outstanding was 100,000. The ending number of common shares outstanding was 150,000. What is the earnings per share
Answers
Answer:
$1.84
Explanation:
The formula for earning per share (EPS) is given as;
= Net income of the company / Average outstanding shares of the company
Given that ;
Net income = $230,000
Average outstanding shares = (100,000 + 150,000) / 2
= 125,000
Therefore,
EPS = $230,000 / 125,000
= $1.84
An investor believes that the price of a stock, say IBM's shares, will increase in the next 60 days. If the investor is correct, which combination of the following investment strategies will show a profit in all the choices?
(i) - buy the stock and hold it for 60 days
(ii) - buy a put option
(ii) - sell (write) a call option
(iv) - buy a call option
(v) - sell (write) a put option
A. (i), (ii), and (iii)
B. (ii) (i), (ii), and (iv)
C. (i), (iv), and (v)
D. (ii) and (iii)
Answers
Answer:
C. (i), (iv), and (v)
Explanation:
(i) - buy the stock and hold it for 60 days
This step is quite natural since buying at lower price and selling at higher price will give profit .
(iv) - buy a call option
In option we do not buy stocks but we buy the right to buy a stock on a predetermined price . For it we give some price for it . It is called premium . As price of stock goes up the premium goes up . So the option premium acts as price of stock , though it does not involve much money . So it is a less investment option . By selling the option at higher premium we can earn income .
v ) An option seller receives money from the buyer in the beginning . So when price rises , the option will not be exercised by the buyer so the seller receives money and earns income as option premium .
Economic research "consistently" finds that immigration negatively impacts the average American wage. "false"
Answers
Answer: The given statement is false.
Explanation:
Immigrants give a boost to the average wages of Americans by increasing the overall productivity and help in investment. Immigrant workers are more advanced in skill sets and knowledge which helps the native Americans to improve their productivity. This process has boosted the investment which in turn increased the demand for labor and increased the pressure on improving wages of labor.
The statement of cash flows for Baldwin Company shows what happens in the Cash account during the year. It can be seen as a summary of the sources and uses of cash (sources of cash are added, uses of cash are subtracted). Please answer which of the following is true if Baldwin makes plant improvements:
a) It is a use of cash, and will be shown in the financing section as a subtraction.
b) It is a source of cash and will be shown in the financing section as an addition.
c) It is a source of cash, and will be shown in the investing section as an addition.
d) It is a use of cash, and will be shown in the investing section as a subtraction.
Answers
Answer:
d) It is a use of cash, and will be shown in the investing section as a subtraction.
Explanation:
The plant improvements will result in cash outflow and is to be considered as an investing activity and not financing activity. It is not a source of cash. So, this option is incorrect.
There will be cash outflows when a company makes plant improvements. It is reported under the investing activity and not under financing activity. So, this option is incorrect.
There will be cash usage when their plant improvements. It is not a source of cash which does not result in cash inflows. So, this option is incorrect.
On October 1st, a company received $30,000 in cash and a building worth $200,000, and in return, issued common stock to an investor. Create the complete journal entry and post to the appropriate T-accounts.
Answers
Answer:
1. Journal:
October 1:
Debit Cash $30,000
Debit Building $200,000
Credit Common Stock $230,000
To record the receipt of cash and building for common stock.
2. T-accounts:
Cash Account
Date Description Debit Credit Balance
Oct. 1 Common Stock $30,000 $30,000
Building Account
Oct. 1 Common Stock $200,000 $200,000
Common Stock
Oct. 1 Cash $30,000 $30,000
Oct. 1 Building $200,000 $200,000
Explanation:
Journal entries show the accounts to be debited and credited respectively. They are the initial records of a business transaction. They can be used to post any transaction, make adjustments to the accounts, and close the accounts at the end of the accounting period.
Selected current year company information follows: Net income $ 17,753 Net sales 730,855 Total liabilities, beginning-year 101,932 Total liabilities, end-of-year 121,201 Total stockholders' equity, beginning-year 216,935 Total stockholders' equity, end-of-year 148,851 The return on total assets is
Answers
Answer:
6.03%
Explanation:
Calculation for the return on total assets
First step will be to find the assets at the beginning using this formula
Beginning year Assets =Beginning Total liabilities + Beginning Stockholders' equity
Let plug in the formula
Beginning year Assets=$101,932 + $216,935
Beginning year Assets=$318,867
Second step is to find the end of the year asset using this formula
End of the year assets = Ending Total liabilities + Ending Stockholders' equity
Let plug in the formula
End of the year assets=$121,201 + $148,851
End of the year assets = $270,052
Last step is to calculate for the return on total assets using this formula
Return on total assets = Net income/Average of total assets,
Let find the Total asset averages
Using this formula
Total asset averages=(Beginning year Assets+End of the year assets)/2
Let plug in the formula
Total asset averages($318,867 + $270,052)/2 Total asset averages=$588,919/2
Total asset averages= $294,459.50
Hence,
Return on total assets = Net income/Average of total assets
Return on total assets=$ 17,753/294,459.50
Return on total assets=0.0603
Return on total assets=6.03%
Therefore the return on total assets will be 6.03%
Sam's total revenue from pilot training classes equaled $90,400. Sam's implicit costs for this year are equal to
Answers
Answer: $45,600
Explanation:
The Implicit cost is the opportunity cost. In other words, it is cost that was incurred because a revenue opportunity was sacrificed.
Sam sacrificed his salary as a pilot, his interest payment and the building he could be renting out.
His total implicit cost is;
= 40,000 + (10,000 * 6%) + 5,000
= $45,600
A company issues $15200000, 9.8%, 20-year bonds to yield 10% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds are $14939182. Using effective-interest amortization, how much interest expense will be recognized in 2017
Answers
Answer:
$1,494,026.16
Explanation:
journal entry to record issuance:
January 1, 2017, bonds issued at discount
Dr Cash 14,939,182
Dr Discount on bonds payable 260,818
Cr Bonds payable 15,200,000
the first coupon payment:
amortization of bond discount = (14,939,182 x 0.1/2) - 744,800 = 2,159.10
Dr Interest expense 746,959.10
Cr Cash 744,800
Cr Discount on bonds payable 2,159.10
the second coupon payment:
amortization of bond discount = (14,941,341.10 x 0.1/2) - 744,800 = 2,267,06
Dr Interest expense 747,067.06
Cr Cash 744,800
Cr Discount on bonds payable 2,267,06
total interest expense for 2017 = $746,959.10 + $747,067.06 = $1,494,026.16
Which of the following affects the wage a firm is willing to pay its workers?
A. The productivity of workers.
B. Consumer demand for the goods and/or services that the firm creates.
C. The amount of fringe benefits the firm is required by law to pay.
D. The level of payroll taxes the firm must pay.
E. All of the above affect the wage a firm is willing to pay its workers.
Answers
Answer: E. . All of the above affect the wage a firm is willing to pay its workers
Explanation:
The wage a firm is willing to pay its workers is affected by:
• The productivity of workers.
• Consumer demand for the goods and/or services that the firm creates.
• The amount of fringe benefits the firm is required by law to pay.
• The level of payroll taxes the firm must pay.
It should be noted that when there's increase in productivity and rise in demand for a good by consumers, companies will be willing to pay more for their workers.
Likewise a decrease in tax and fringe benefits affects companies paying ability.
Fireside Inc. has the following data. What is the firm's cash conversion cycle? ( Please Show Work)
Inventory conversion period 38 days
Average collection period 19 days
Payables deferral period 20 days
Answers
Answer:
37 days
Explanation:
Fireside incorporation has the following data
Inventory conversion period = 38 days
Average collection period = 19 days
Payables deferral period = 20 days
Therefore the firm's cash conversion cycle can be calculated as follows
= 38 days + 19 days - 20 days
= 57 days - 20 days
= 37 days
Hence the firm's cash conversion cycle is 37 days
Which accounting principle states that all transactions have two aspects: debit and credit?
A: historical cost
B: matching
C: dual-aspect
D: accrual
E: business entity
Answers
Answer:
The answer is c
Explanation:
Answer:
The answer is c
Explanation:
On december 2017 coolwear had a balance in its prepaid insurance acount of 68,400. During 2018, 106,000 was paid for insurance. At the end of 2018, after adjusting entries were recorded, the balance in the prepaid insurance account was $42,000. Insurance expense recorded for 2018 would be:_____.
A. $86,000.
B. $134,400.
C. $74.400.
D. $92,400.
Answers
Answer:
$132,400
Explanation:
Calculation for the Insurance expense
Using this formula
Insurance expense= 2017 Ending Balance in prepaid insurance account+ Amount paid for insurance-2018 Ending Balance in prepaid insurance account
Let plug in the formula
Insurance expense=$68,400+$106,000-$42,000
Insurance expense=$132,400
Therefore the Insurance expense recorded 2018 would be $132,400