Final answer:
The question relates to recording the remaining prepaid insurance as of December 31st. The journal entry would be a debit to Insurance Expense and a credit to Prepaid Insurance, to reflect the expired portion of the policy.
Step-by-step explanation:
The question appears to be about accounting, particularly the adjustment of prepaid insurance entry at the end of the accounting period. On December 31, if a company still has prepaid insurance, it means that this is an asset that the company will consume in future periods. The correct journal entry to record the remaining prepaid insurance would typically involve a debit to the Insurance Expense account and a credit to the Prepaid Insurance account.
Step-by-Step Explanation:
Assess the total amount paid for the insurance policy.
Determine the portion of the prepaid insurance that has expired up to the date of the financial statements, which in this case is December 31.
Debit the Insurance Expense account for the expired portion.
Credit the Prepaid Insurance account for the same amount, reducing the prepaid asset on the balance sheet.
The explanation that accompanies these journal entries would state that the entry is being made to record the insurance expense incurred during the period and to adjust the prepaid insurance asset for the portion that has been consumed.