Avalon Event Planning Services,Inc.records deferred expenses and deferred revenues using the alternative treatments.It makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,it paid $3,600 for insurance for a one-year period.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,200.

Question

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Prepaid Expense = $3,600 × 8/12 = $2,400