Question

QRS Industries opens its fiscal year with a $500 balance in its prepaid insurance account. QRS purchases $2,500 in insurance policies during the year. If $875 of insurance has expired during the year, what is the year-end balance in the prepaid insurance account after all necessary entries have been made? A : $1,625 debit B : $2,125 debit C : $3,000 debit D : $875 credit

Answer 1

Explanation:

$2,500-$875=1625

1625+500=2125

So I think the answer is B:$2125 debit

Answer 2

The correct option is B.

Explanation:

It is given that QRS Industries opens its fiscal year with a $500 balance in its prepaid insurance account.

$500 (Debit)

QRS purchases $2,500 in insurance policies during the year.

$2,500 (Debit)

$875 of insurance has expired during the year.

$875 (credit)

The balance in the prepaid insurance account after all necessary entries is

Balance = $500 + $2,500 - $875

Balance = $2,125

Therefore the the correct option is B.