On December 1, 2017, Flynn Consulting paid $27,000 for a three-year insurance policy (December 1, 2017 to November 30, 2020) and debited the entire amount to Prepaid Insurance. The December 31, 2017 required adjusting entry in connection with this policy would be
A. debit Prepaid Insurance and credit Insurance Expense $750.
B. debit Insurance Expense and credit Prepaid Insurance $750.
C. debit Insurance Expense and credit Prepaid Insurance $26,250.
D. debit Prepaid Insurance and credit Insurance Expense $26,250.
Answer:B
On December 1, 2017, Flynn Consulting paid $27,000 for a three-year insurance policy (December 1, 2017 to November 30, 2020) and debited the entire amount to Prepaid Insurance. The December 31, 2017 required adjusting entry in connection with this policy would be
A. debit Prepaid Insurance and credit Insurance Expense $750. B. debit Insurance Expense and credit Prepaid Insurance $750. C. debit Insurance Expense and credit Prepaid Insurance $26,250. D. debit Prepaid Insurance and credit Insurance Expense $26,250.