Question

What is the proper adjusting entry at December 31. the end of the accounting period, if the balance in the prepaid insurance account is dollar 7, 750 before adjustment, and the unexpired amount per analysis of policies is. dollar 3, 250?

A. Debit Insurance Expense, dollar 3, 250; credit Prepaid Insurance. dollar 3, 250.
B. Debit Prepaid Insurance; dollar 4, 500; credit Insurance Expense, dollar 4, 500.
C. Debit Insurance Expense, dollar 4, 500; credit Prepaid Insurance, dollar 4, 500.
D. Debit Insurance Expense, dollar 7, 750; credit Prepaid Insurance, dollar 7, 750.
E. Debit Cash, dollar 7, 750; Credit Prepaid Insurance, dollar 7, 750.

Answer 1

C. Debit Insurance Expense, dollar 4, 500; Credit Prepaid Insurance, dollar 4, 500

Step-by-step explanation:

Date Account Title Debit Credit

Dec 31 Insurance expense $4,500

Prepaid insurance $4,500

($7,750-3,250)

Option C is correct.