J. Bateman Enterprises prepaid $7,800 for a 12 month insurance policy on their d

Question

J. Bateman Enterprises prepaid $7,800 for a 12 month insurance policy on their delivery van beginning in October 2014. What would be the journal entry to recognize the monthly insurance that had been used up in January 2015?

Item A is the correct entry

Item B is the correct entry

Item C is the correct entry

Item D is the correct entry

Item Accounts and Explanations Post Ref DEBIT CREDIT A Prepaid Insurance $7,800    Insurance Expense $7,800 B Cash $650    Insurance Expense $650 C Insurance Expense $650          Prepaid Insurance $650 D Insurance Expense $650     Cash $650

Explanation / Answer

Monthly adjusting entry :

So answer is 3) Item C is the correct entry

Date account & explanation debit credit Insurance expense (7800/12) 650 Prepaid insurance 650 (TO record monthly insurance)

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