Manhattan Park Adjusts Its Books Each Month and Closes Its

Multiple Choice

Manhattan Park adjusts its books each month and closes its books on December 31 each year. The trial balance at January 31, of the current year, before adjustments, follows:

-Refer to the above data. On August 1, of the previous year, the park purchased a 12-month insurance policy. The necessary adjusting entry at January 31 of the current year, includes which of the following entries? (Hint: The company has adjusted its books on a monthly basis.)

A) A debit to Insurance Expense for $1,050.
B) A credit to Unexpired Insurance for $11,550.
C) A credit to Unexpired Insurance for $1,800.
D) A debit to Unexpired Insurance for $10,800.