On December 1, Your Company Paid Its Insurance Agent $2,400

Multiple Choice

On December 1, your company paid its insurance agent $2,400 for the annual insurance premium covering the twelve-month period beginning on December 1. The $2,400payment was recorded on December 1 with a debit to the income statement account Insurance Expense and a credit to the current asset Cash. Your company prepares monthly financial statements at the end of each calendar month.The entry to be made at the December 31 month end to adjust the accounts is:

A) Debit Prepaid Insurance 200; Credit Insurance Expense 200.
B) Debit Insurance Expense 200; Credit Prepaid Insurance 200.
C) Debit Insurance Expense 2400; Credit Prepaid Insurance 2400.
D) Debit Insurance Expense 2200; Credit Prepaid Insurance 2200.
E) Debit Prepaid insurance 2200; Credit Insurance Expense 2200.