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On July 1, East Lake, Inc. purchased a 2-year insurance policy for $12,600 cash. Prepaid...

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Accounting

On July 1, East Lake, Inc. purchased a 2-year insurance policy for $12,600 cash. Prepaid Insurance was debited for the entire amount. On December 31, when the year-end financial statements are prepared, assuming adjusting entries are made annually, the appropriate adjusting journal entry to be made would be to

a.debit Prepaid Insurance $2,100; credit Insurance Expense $2,100.

b.debit Insurance Expense $9,450; Credit Prepaid Insurance $9,450.

c.debit Prepaid Insurance $12,600; credit Insurance Expense $12,600.

d.debit Insurance Expense $3,150; credit Prepaid Insurance $3,150.

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