Early in 2018, Benton Well Supplies discovered that a five-year insurance premium payment of $50,000 at the beginning of 2015 was debited to insurance expense. The correcting entry would include:
A) A credit to retained earnings of $20,000.
B) A debit to insurance expense of $20,000.
C) A debit to prepaid insurance of $30,000.
D) A debit to prepaid insurance of $50,000.

Question

Quizplus · Accepted Answer

The correcting entry would include a debit to prepaid insurance for $20,000 and a credit to retained earnings for $20,000 since there are two years remaining on the insurance policy.

Early in 2018, Benton Well Supplies Discovered That a Five-Year