Assume Idaho Company Recorded the Following Adjusting Journal Entry at Year-End

Multiple Choice

Assume Idaho Company recorded the following adjusting journal entry at year-end: If the beginning balance in prepaid insurance was $500, and $2,500 was paid for an insurance premium during the year, what is the ending balance in the prepaid insurance account after the above adjusting entry?
$$\begin{array} { | c | r | r | } \hline \text { Insurance expense } & \$ 2,000 & \\\hline \text { Prepaid insurance } & & \$ 2,000 \\\hline\end{array}$$

A) $1,200.
B) $700.
C) $2,200.
D) $1,000.