Reference no: EM13864854
On January 1 a company purchased a five-year insurance policy for $2,300 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
A) Debit Insurance Expense, $460; credit Prepaid Insurance, $1,840.
B) Debit Prepaid Insurance, $460; credit Insurance Expense, $460.
C) Debit Prepaid Insurance, $1,840; credit Insurance Expense, $1,840.
D) Debit Insurance Expense, $460; credit Prepaid Insurance, $460.
E) Debit Prepaid Insurance, $2,300; credit Cash, $2,300.
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