On Oct 1, 2016, a firm purchased a 1-year insurance policy for $2,400 and paid t
ID: 2485167 • Letter: O
Question
On Oct 1, 2016, a firm purchased a 1-year insurance policy for $2,400 and paid the full premium in advance. The adjustment needed on December 31, 2016, to report the amount of insurance that had expired, would be:
a debit to Prepaid Insurance for $600 and a credit to Insurance Expense for $600.
a debit to Insurance Expense for $600 and a credit to Prepaid Insurance for $600.
a debit to Insurance Expense for $2,400 and a credit to Cash for $2,400.
a debit to Insurance Expense for $1,800 and a credit to Prepaid Insurance for $1,800
Explanation / Answer
Date
Journal
Debit
Credit
Dec.31,2016
Insurance Expense
$2,400
Cash
$2,400
Date
Journal
Debit
Credit
Dec.31,2016
Insurance Expense
$2,400
Cash
$2,400
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