What adjusting entry should they make on december

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Question - Cromartie Corporation purchases a two-year insurance policy on July 1, 2008. At the time, they recorded the transaction as a debit to Insurance Expense and a credit to Cash for $6,000. What adjusting entry should they make on December 31, 2008?

A. Debit Insurance Expense (Ret. Earn) and credit Prepaid Insurance for $1,500

B. Debit Prepaid Insurance and credit Insurance Expense (Ret. Earn) for $4,500

C. Debit Prepaid Insurance and credit Cash for $4,500

D. No adjustment is necessary

Reference no: EM131628644

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