What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?
A) Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250.
B) Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.
C) Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750.
D) Debit Cash, $7,750; Credit Prepaid Insurance, $7,750.
E) Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500.

Question

Quizplus · Accepted Answer

The expired portion of the prepaid insurance is $7,750 - $3,250 = $4,500. Therefore, the adjusting entry should debit Insurance Expense and credit Prepaid Insurance for $4,500.

What Is the Proper Adjusting Entry at December 31, the End