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ABC Ltd. has a 30 June fiscal year end. ABC Ltd. purchased a one-year insurance policy of $12,000 on its office equipment on 1 February

ABC Ltd. has a 30 June fiscal year end. ABC Ltd. purchased a one-year insurance policy of $12,000 on its office equipment on 1 February 2016. Which of the following adjusting entry would be made by ABC Ltd. on 30 June 2016:

Select one:

a. Dr Prepaid Insurance $12,000 Cr Insurance Expense $7,000 Cr Cash $5,000

b. Dr Prepaid Insurance $5,000 Cr Insurance Expense $5,000

c. Dr Insurance Expense $5,000 Cr Prepaid Insurance $5,000

d. Dr Insurance Expense $5,000 Dr Insurance Payable $7,000 Cr Prepaid Insurance $12,000

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