On December 31,2015,Coolwear,Inc.had a balance in its prepaid insurance account of $48,400.During 2016,$86,000 was paid for insurance.At the end of 2016,after adjusting entries were recorded,the balance in the prepaid insurance account was 42,000.Insurance expense for 2016 would be:

Question

Quizplus · Accepted Answer

The initial balance in the prepaid insurance account was $48,400. During 2016, $86,000 was paid for insurance, so the total amount available for insurance coverage in 2016 was $48,400 + $86,000 = $134,400. 
After adjusting entries at the end of 2016, the balance in the prepaid insurance account was $42,000. This means that $92,400 ($134,400 - $42,000) was used for insurance coverage in 2016. Therefore, insurance expense for 2016 would be $92,400. 
Therefore, the correct answer is D.