Associated Services Company paid twelve months' insurance in advance totaling $9,000. At the end of the first month, the adjusting entry would include a:

Question

Quizplus · Accepted Answer

Since 1 month has passed, we need to record the insurance expense for that month. The adjusting entry will be a debit to Insurance Expense for $750 (1/12 of $9,000) and a credit to Prepaid Insurance for $750 (the unused portion of the insurance). Therefore, the correct choice is D.

Associated Services Company Paid Twelve Months' Insurance in Advance Totaling