Friday. January 4 (the shop is back opent) i. You analyzed t he prepaid insuranc

Question

Friday. January 4 (the shop is back opent) i. You analyzed t he prepaid insurance account, noting that the account balance is co mprised of 2 advanee payments relating to insurance: $6,990 paid in June with coverage effective as of 7/1/2012 through 12/31/2012. · 7,125 paid in December with coverage effective as of 1/1/2013 through 6/30/2013 Insurance Expense Prepaid Insurance What is the 12/31" account balance in the Insurance Expense ledger account after the AJE necessary to record the above situation? A. $6,990 B. $12,990 C. $6,930 D. $13,920 E. None of the above A. Adjustment of an existing deferred expense. B. An adjustment to accrue expense C. An adjustment to correct an error D. Adjustment of an existing deferred revenue. E. None of the above

Explanation / Answer

Answer:

Insurance expense a/c            Dr. 6990

           To Prepaid Insurance                6990

A.$6990

A.Adjustment of an existing deferred expense

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