Mal De Mere Cruises Purchased a Five-Year Insurance Policy for Its

Mal de Mere Cruises purchased a five-year insurance policy for its ships on April 1 2016 for $50000. Assuming that April 1 is the effective date of the policy the adjusting entry on December 31 2016 is a. $\begin{array}{lrr}\text { Prepaid Insurance }&7,500\\\text { Insurance Expense. } &&7,500 \\\end{array}$

b. $\begin{array}{lrr}\text { Insurance Expense} & 7,500 \\\text { Prepaid Insurance } &&7,500 \\\end{array}$

c. $\begin{array}{lrr} \text { Insurance Expense } & 10,000 \\ \text { Prepaid Insurance } &&10,000 \\\end{array}$

d. $\begin{array}{lrr}\text { Insurance Expense } &2,500\\\text { Prepaid Insurance }&&2,500\end{array}$