Kim Company Purchased a Two-Year Insurance Policy on October 1

Multiple Choice

Kim Company purchased a two-year insurance policy on October 1, 2012, for $6,000. The policy covers its buildings for the next two years. If Kim debited Prepaid Insurance to record the purchase of the policy, the adjusting entry on December 31, 2012 (year-end) would include a credit to

A) Insurance Expense of $750
B) Insurance Expense of $3,000
C) Prepaid Insurance of $750
D) Prepaid Insurance of $3,000