Among other things, the trial balance of Ashanti, Inc., at December 31, 2023 includesPrepaid Insurance of $7,500. Examination of the company’s records shows that an adjustment should be made to the Prepaid Insurance account for the following reason: of the $7,500 of Prepaid Insurance in the trial balance, $2,500 is for insurance coverage during the months after December 31, 2023. Which of the following is the correct adjusting entry?  Debit Prepaid Insurance $7,500; credit Insurance Expense $7,500. Debit Prepaid Insurance $2,500; credit Insurance Expense $2,500. Debit Prepaid Insurance $5,000; credit Insurance Expense $5,000. Debit Insurance Expense $5,000; credit Prepaid Insurance $5,000. Debit Insurance Expense $2,500; credit Prepaid Insurance $2,500. Debit Insurance Expense $7,500; credit Prepaid Insurance $7,500.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Among other things, the trial balance of Ashanti, Inc., at December 31, 2023 includesPrepaid Insurance of $7,500. Examination of the company’s records shows that an adjustment should be made to the Prepaid Insurance account for the following reason: of the $7,500 of Prepaid Insurance in the trial balance, $2,500 is for insurance coverage during the months after December 31, 2023. Which of the following is the correct adjusting entry

Debit Prepaid Insurance $7,500; credit Insurance Expense $7,500.

Debit Prepaid Insurance $2,500; credit Insurance Expense $2,500.

Debit Prepaid Insurance $5,000; credit Insurance Expense $5,000.

Debit Insurance Expense $5,000; credit Prepaid Insurance $5,000.

Debit Insurance Expense $2,500; credit Prepaid Insurance $2,500.

Debit Insurance Expense $7,500; credit Prepaid Insurance $7,500.

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