What is the proper adjusting entry at June 30 the end of the fiscal year based on a prepaid insurance account balance before adjustment $15400 and unexpired amounts per analysis of policies of $5000?
A) Debit Insurance Expense $5000; Credit Prepaid Insurance $5000.
B) Debit Insurance Expense $15400; Credit Prepaid Insurance $15400.
C) Debit Prepaid Insurance $10400; Credit Insurance Expense $10400.
D) Debit Insurance Expense $10400; Credit Prepaid Insurance $10400.

Question

Quizplus · Accepted Answer

The correct adjusting entry is to recognize the insurance expense for the period. Since the unexpired amount is $5000, the difference ($15400 - $5000 = $10400) should be recognized as the insurance expense for the period. This is done by debiting Insurance Expense and crediting Prepaid Insurance for $10400.

What Is the Proper Adjusting Entry at June 30 the End