Final answer:
The adjusting entry for Shaw Company when unexpired insurance premium totals $2,200 would be to decrease the prepaid insurance account and increase the insurance expense account.
Step-by-step explanation:
The adjusting entry for Shaw Company when unexpired insurance premium totals $2,200 would be to decrease the prepaid insurance account and increase the insurance expense account.
If Shaw Company initially recorded the prepaid insurance as an expense, it means they treated it as an immediate expense rather than a prepaid asset. To correct this, the adjusting entry should debit prepaid insurance for $2,200 to decrease the prepaid asset account and credit insurance expense for $2,200 to increase the expense account.
This adjustment recognizes that a portion of the prepaid insurance has been used up and should be expensed in the current period.