Answer: $10,400
Explanation:
Given: On May 1, a two-year insurance policy costs = $31,200
Coverage starts immediately, Insurance expense for one year it cost [tex]\dfrac{31200}{2}=\$15600[/tex]
Insurance expense for 1 month = [tex]\dfrac{\$15600}{12}=\$1300[/tex] [1 year = 12 months]
From May to December, it will be 8 months .
Insurance expense for 8 months =[tex]8\times\$1300= \$10,400[/tex]
The amount of insurance expense that would appear on the company's income statement for the first year ended December 31 = $10,400
