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Problem 1: What is the proper adjusting entry at June 30, the end of the fiscal year, based on a prepaid insurance account balance before adjustment, $18550, and unexpired amounts per analysis of policies of $5980?
Option 1: Debit Insurance Expense, $5980; Credit Prepaid Insurance, $5980.
Option 2: Debit Insurance Expense, $18550; Credit Prepaid Insurance, $18550.
Option 3: Debit Prepaid Insurance, $12570; Credit Insurance Expense, $12570.
Option 4: Debit Insurance Expense, $12570; Credit Prepaid Insurance, $12570
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