On 31^st December 20X1, Immediately Prior to Entering Adjusting Entries

On 31^st December 20X1, immediately prior to entering adjusting entries, the prepaid insurance account of the White Lion Hotel has a balance of $1,200. This concerns a payment made on 30^th September 20X1 for 12 months of insurance cover. The adjusting entry that needs to be made on 31^st December 20X1 is:

A) Debit prepaid insurance $300, credit insurance expense $300.
B) Debit prepaid insurance $1,200, credit insurance expense $1,200.
C) Debit insurance expense $1,200, credit prepaid insurance $1,200.
D) Debit insurance expense $300, credit prepaid insurance $300.
E) None of the above.