An insurance policy premium of $1,200 was paid on September 1, 2012, to cover a one-year period from that date. An asset was debited on that date.

Adjusting entries are prepared once a year, at yearend. The necessary adjusting entry at the company’s year-end, December 31, 2012, is:

Transcribed Image Text:

a. Prepaid Insurance Insurance Expense 400 400 b. Insurance Expense 800 Prepaid Insurance 800 c. Prepaid Insurance 800 Insurance Expense 800 d. Insurance Expense 400 Prepaid Insurance 400