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?

Question

Business

Kaden Graves

8 April, 22:17

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)

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Tabitha Holloway · Answer 1

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.