The Balance in the Prepaid Insurance Account Before Adjustment at the End

Multiple Choice

The balance in the prepaid insurance account before adjustment at the end of the year is $4,800, which represents the insurance premiums for four months. The premiums were paid on November 1. The adjusting entry required on December 31 is:

A) Debit Insurance Expense, $2,400; credit Prepaid Insurance, $2,400.
B) Debit Prepaid Insurance, $2,400; credit Insurance Expense, $2,400.
C) Debit Insurance Expense, $1,200; credit Prepaid Insurance, $1,200.
D) Debit Prepaid Insurance, $1,200; credit Insurance Expense, $1,200.
E) Debit Cash, $4,800; Credit Prepaid Insurance, $4,800.