The Prepaid Insurance account has a normal balance of $5,625 at the beginning of the month.The company used $1,470 of insurance coverage during the month.Which of the following statements is correct?
A) The company should credit Insurance Expense for $1,470 and debit Prepaid Insurance for $1,470.
B) Retained earnings will decrease and stockholders' equity will increase.
C) The company should debit Insurance Expense for $1,470 and credit Prepaid Insurance for $1,470.
D) Retained earnings and stockholders' equity will both increase.
Correct Answer:
Verified
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