On July 1, East Lake, Inc. purchased a 2-year insurance policy for $12,600 cash. Prepaid...
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Accounting
On July 1, East Lake, Inc. purchased a 2-year insurance policy for $12,600 cash. Prepaid Insurance was debited for the entire amount. On December 31, when the year-end financial statements are prepared, assuming adjusting entries are made annually, the appropriate adjusting journal entry to be made would be to
a.debit Prepaid Insurance $2,100; credit Insurance Expense $2,100.
b.debit Insurance Expense $9,450; Credit Prepaid Insurance $9,450.
c.debit Prepaid Insurance $12,600; credit Insurance Expense $12,600.
d.debit Insurance Expense $3,150; credit Prepaid Insurance $3,150.
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