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Question
Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?
| a. | Insurance Expense | 1,750 | |
| Prepaid Insurance | 1,750 | ||
| b. | Prepaid Insurance | 1,750 | |
| Insurance Expense | 1,750 | ||
| c. | Insurance Expense | 1,750 | |
| Prepaid Insurance | 2,450 | ||
| Accounts Payable | 4,200 | ||
| d. | Insurance Expense | 2,450 | |
| Prepaid Insurance | 2,450 |
Answer
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