On 1 July 2014 Tan Traders Paid $600, Representing a Two-Year

Multiple Choice

On 1 July 2014 Tan Traders paid $600, representing a two-year insurance premium. The $600 was initially recorded in the Insurance expense account. After adjustment at 31 December 2015, the close of the annual accounting period:

A) insurance expense in the income statement is $600 and prepaid insurance in the balance sheet is $0.
B) insurance expense in the income statement is $150 and prepaid insurance in the balance sheet is $450.
C) insurance expense in the income statement is $450 and prepaid insurance in the balance sheet is $0.
D) insurance expense in the income statement is $300 and prepaid insurance in the balance sheet is $150.