Samantha purchased a two-year insurance policy for $7,200.The adjusting entry for one month would include a:
A)debit to Insurance Expense,$300.
B)credit to Cash,$300.
C)debit to Prepaid Insurance,$300.
D)credit to Insurance expense,$300.

Question

Quizplus · Accepted Answer

The adjusting entry for one month would include a debit to Insurance Expense for $300 because the insurance policy is for two years, which is 24 months. Therefore, the monthly expense is $7,200 divided by 24 months, equaling $300 per month.

Samantha Purchased a Two-Year Insurance Policy for $7,200