A Company Purchases a One-Year Insurance Policy on June 1

Multiple Choice

A company purchases a one-year insurance policy on June 1 for $2,760. The adjusting entry on December 31 is

A) debit Insurance Expense, $1,380 and credit Prepaid Insurance, $1,380.
B) debit Insurance Expense, $1,150 and credit Prepaid Insurance, $1,150.
C) debit Insurance Expense, $1,610, and credit Prepaid Insurance, $1,610.
D) debit Prepaid Insurance, $1,380, and credit Cash, $1,380.