Burnet Co Has a $4,050 Balance in Prepaid Insurance That Represents

Multiple Choice

Burnet Co. has a $4,050 balance in Prepaid Insurance that represents the premium paid in advance for a nine-month liability insurance policy. Assuming that 5 months of premium is still remaining, the adjusting entry would be recorded as:

A)
Insurance Expense $\quad \$ 1,800$
Prepaid Insurance $\quad \$ 1,800$
B)
Insurance Expense $\quad \$ 2,250$
Prepaid Insurance $\quad \$ 2,250$
C)
Insurance Expense $\quad \$ 1,800$
Cash $\quad\$ 1,800$
D)
$\begin{array} { l r } \text { Insurance Expense } & \$ 2,250 \\\text { Cash } & \$ 2,250\end{array}$