Question

identify assumptions and concepts and correct entries.

On December 31, SGI Company's fical year end, a 12-month insurance policy for the following year was purchased. The following entry was made:
DR. insurance expense $24000
CR. cash $24,000

Answer 1

If for the following year, the entry should have been to prepaid insurance, an asset account, not to insurance expense.

This is because the expense is not for the current year. The expense belongs in the next fiscal year.

Current year entry, should have been
DB Prepaid Insurance
CR Cash

To correct this entry,
DB Prepaid Insurance 24,000
CR Insurance Expense 24,000

This is assuming these are accounts you are supposed to use.

Answer 2

Thank u helper ^_^

Answer 3

You're welcome.