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22 April, 07:06

Which of the following is the proper adjusting entry, based on a prepaid insurance account balance before adjustment of $13,194 and unexpired insurance of $2,046, for the fiscal year ending on April 30-debit Prepaid Insurance, $5,849; credit Insurance Expense, $5,849-debit Prepaid Insurance, $10,209; credit Insurance Expense, $10,209-debit Insurance Expense, $10,209; credit Prepaid Insurance, $10,209-debit Insurance Expense, $5,849; credit Prepaid Insurance, $5,849

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  1. 22 April, 07:14
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    Debit Insurance expense $11,148

    Credit Prepaid insurance $11,148

    The right answer is not given in the options.

    Explanation:

    The prepaid insurance account balance is the amount unexpired or unused and as such yet to be amortized to the insurance expense account.

    Given that the unadjusted balance is $13,194 and the unexpired insurance of $2,046, for the fiscal year ending on April 30, the expired insurance is

    = $13,194 - $2,046

    = $11,148

    Adjusting entries required

    Debit Insurance expense $11,148

    Credit Prepaid insurance $11,148

    Being entries to recognize insurance expense incurred as at April 30.
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