Answer (Choose 1 answer)
The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:
A. Debit Cash, $4,800; Credit Prepaid Insurance, $4,800.
B. Debit Insurance Expense, $2,400,credit Prepaid Insurance, $2,400.
C. Debit Prepaid Insurance, $1,200;credit Insurance Expense, $1,200
D. Debit Insurance Expense, $1,200;credit Prepaid Insurance, $1,200.
E. Debit Prepaid Insurance, $2,400;credit Insurance Expense. $2,400.
Exit 21
