Question

At December 31, 2018, before any year-end adjustments, Murmur Company's Insurance Expense account had a balance of $2,450 and its Prepaid Insurance account had a balance of $3,800. It was determined that $2,800 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be $2,450. $3,450. $2,800. $5,250.

Answer 1

Option (B) is correct.

Step-by-step explanation:

Given that,

Insurance Expense account = $2,450

Prepaid Insurance account = $3,800

Amount of Prepaid Insurance expired = $2,800

Adjusted insurance expense:

= Insurance Expense account + (Prepaid Insurance account - Amount of Prepaid Insurance expired)

= $2,450 + ($3,800 - $2,800)

= $3,450

Therefore, the adjusted balance for Insurance Expense for the year would be $3,450.