At December 31, 2014, before any year-end adjustments, Fawcett Foundry Company's Insurance Expense account had a balance of $725 and its Prepaid Insurance account had a balance of $2,900. It was determined that $1,500 of the Prepaid Insurance had expired. The adjusted balance for Insurance Expense for the year would be
A) $1,500.
B) $725.
C) $2,225.
D) $1,125.

Question

Quizplus · Accepted Answer

The adjusted balance for Insurance Expense is calculated by adding the expired portion of the Prepaid Insurance ($1,500) to the existing balance in the Insurance Expense account ($725), which equals $2,225.

At December 31, 2014, Before Any Year-End Adjustments, Fawcett Foundry