Introduction to Adjusting Journal Entries and Prepaid Expenses Video Lessons

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Problem: Jorge opened his business on 6/1/15 and paid for a 12 month insurance policy in advance, for $2,400. Assuming no adjusting entries have been made, was adjusting entry must he make on 12/31/15? A. Debit: Prepaid Insurance $2,400 and Credit: Cash $2,400 B. Debit: Insurance Expense $1,200 and Credit: Cash $1,200 C. Debit: Insurance Expense $600 and Credit: Prepaid Insurance $600 D. Debit: Insurance Expense $1,400 and Credit: Prepaid Insurance $1,400

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Problem Details

Jorge opened his business on 6/1/15 and paid for a 12 month insurance policy in advance, for $2,400. Assuming no adjusting entries have been made, was adjusting entry must he make on 12/31/15?

A. Debit: Prepaid Insurance $2,400 and Credit: Cash $2,400

B. Debit: Insurance Expense $1,200 and Credit: Cash $1,200

C. Debit: Insurance Expense $600 and Credit: Prepaid Insurance $600

D. Debit: Insurance Expense $1,400 and Credit: Prepaid Insurance $1,400

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