Coffee Co Has a $3,600 Balance in Prepaid Insurance That Represents

Multiple Choice

Coffee Co. has a $3,600 balance in Prepaid Insurance that represents the premium paid in advance for a six-month liability insurance policy. Assuming that 4 months of premium is still remaining, the adjustment would be recorded in the work sheet as a:

A) credit to Insurance Expense, $2,400
B) debit to Insurance Expense, $2,400
C) credit to Prepaid Insurance, $1,200
D) debit to Prepaid Insurance, $1,200