What is the journal entry that the accountant should make

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Comfy Home has an insurance policy for which it pays an annual premium of $12,000. Comfy Home's accountant is preparing journal entries for the month of January. The insurance premium for 2018 was paid in cash on January 2, 2018.

Problem 1: What is the journal entry that the accountant should make on January 31, 2018 related to the insurance policy?

Group of answer choices

Option 1: Debit to Prepaid Expenses for $1,000 and Credit to Insurance Expense for $1,000

Option 2: Debit to Insurance Expense for $1,000 and Credit to Cash for $1,000

Option 3: Debit to Insurance Expense for $1,000 and Credit to Prepaid Expenses for $1,000

Option 4: No entry is needed on January 31, 2018.

Reference no: EM132833012

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