Early in 2018, Ashland Granite discovered that a five-year insurance premium payment of $750,000 at the beginning of 2015 was debited to insurance expense. The correcting entry would include:
A) A debit to prepaid insurance of $750,000.
B) A debit to insurance expense of $300,000.
C) A debit to prepaid insurance of $450,000.
D) A credit to retained earnings of $300,000.

Question

Quizplus · Accepted Answer

The correcting entry would debit prepaid insurance for $300,000 and a credit to retained earnings for $300,000 because there are two years remaining on the insurance policy.

Early in 2018, Ashland Granite Discovered That a Five-Year Insurance