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20 November, 01:50

What is the proper adjusting entry at december 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?

a. debit insurance expense, $3,250; credit prepaid insurance, $3,250.

b. debit insurance expense, $4,500; credit prepaid insurance, $4,500.

c. debit prepaid insurance, $4,500; credit insurance expense, $4,500.

d. debit insurance expense, $7,750; credit prepaid insurance, $7,750.

e. debit cash, $7,750; credit prepaid insurance, $7,750?

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Answers (1)
  1. 20 November, 02:20
    0
    It would be b because expenses are always debited and since there will be a remaining balance of $3,250 after the adjusting entry, you would take the difference between both amounts to get $4,500 as the amount that is being accounted for at the end of the period.
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