Final answer:
The question concerns the creation of adjusting entries for insurance policies at a vocational school, indicating a focus on properly allocating insurance expenses in the financial statements. An analysis of the policies will determine the portion of prepaid insurance that should be recognized as an expense for the period.
Step-by-step explanation:
The subject of this question revolves around the preparation of adjusting entries at the end of an accounting period, specifically pertaining to insurance policies for Walker Technical Institute, a vocational school. Adjusting entries are essential in accrual accounting to allocate incomes and expenditures to the period in which they actually occur, which ensures the financial statements accurately reflect the business activities. As the question describes, an analysis of WTI insurance policies is likely to reveal the amount of insurance expense that has been incurred during the period and the remaining prepaid insurance balance that should be reported on the balance sheet.
Typically, a prepaid insurance account reflects the payments made in advance for insurance coverage over a certain period. To adjust for the insurance expense, an accountant would calculate the portion of the prepaid insurance that has expired during the current accounting period, then make an adjusting entry to record this as an expense, decreasing the prepaid insurance asset and increasing the insurance expense.
Without the specific figures or details on the insurance policies, however, an exact adjusting entry cannot be provided, but the process generally involves recording insurance expense for the period covered and reducing the prepaid insurance account accordingly.