A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. 14 - Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below Click the answer you think is right.

a. Prepaid insurance would be credited for $3,600.

b. Cash would be credited for $3,600.

c. Insurance expense would be debited for $300.

d. Insurance expense would be debited for $3,600.

Question

Chloe Noble

Business

13 April, 18:49

A 12-month insurance policy was purchased on Dec. 1 for $3,600 and the Prepaid insurance account was increased for the payment. 14 - Demonstrate the required adjusting journal entry on Dec. 31 by selecting from the choices below Click the answer you think is right.

a. Prepaid insurance would be credited for $3,600.

b. Cash would be credited for $3,600.

c. Insurance expense would be debited for $300.

d. Insurance expense would be debited for $3,600.

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Answers (1)

Know the Answer?

Katelynn Parrish · Answer 1

c. Insurance expense would be debited for $300.

Explanation:

Provided that

12 month insurance policy purchased on Dec 1 = $3,600

So, the adjusting entry on Dec 31 would be

Insurance expense A/c Dr $300

To Prepaid Insurance $300

(Being insurance expense is recorded)

The computation is

= $3,600 : 12 months

= 300

As we have to compute for 1 month so we recorded $300 insurance expense