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On January 1, a company purchased a five-year insurance policy for $3,600 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments
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On January 1, a company purchased a five-year insurance policy for $3,600 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:

A. Debit Prepaid Insurance, $2.880; credit Insurance Expense, $2,880.
B. Debit Prepaid Insurance, $3,600; credit Cash, $3,600.
C. Debit Insurance Expense, $720; credit Prepaid Insurance. $2.880.
D. Debit Insurance Expense. $720; credit Prepaid Insurance, $720.
E. Debit Prepaid Insurance. $720; credit Insurance Expense, $720

User Mauro Stepanoski
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23 votes
23 votes
i believe the answer choice would be D
User Matt Doyle
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