At year-end, the balance in the prepaid insurance account, prior to any adjustments, is $6,000. The amount of the journal entry required to record insurance expense will be $4,000 if the amount of unexpired insurance applicable to future periods is $2,000.

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The journal entry to record insurance expense would be a debit to Insurance Expense for $4,000 and a credit to Prepaid Insurance for $2,000 ($6,000 balance minus $2,000 unexpired insurance).

At Year-End, the Balance in the Prepaid Insurance Account, Prior