Problem

On October 1. 2011, the $12,000 premium on a one-year insurance policy for the building wa...

On October 1. 2011, the $12,000 premium on a one-year insurance policy for the building was paid and recorded as Prepaid Insurance. On December 31 , 2011 (end of the accounting period), what adjusting entry is needed?

a.

Insurance Expense ( + E)

2,000

 

 

Prepaid Insurance (−A)

 

2,000

b.

Insurance Expen se ( + E)

3,000

 

 

Prep aid Insurance (−A)

 

3,000

c.

Prepaid Insurance ( + A)

3,000

 

 

Insurance Expense (−E)

 

3,000

d.

Prepaid Insurance ( + A)

9,000

 

 

Insurance Expense (−E)

 

9,000

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