Adjusting Entries for Prepaid Insurance

The prepaid insurance account had a balance of $7,000 at the beginning of the year. The account was debited for $24,000 for premiums on policies purchased during the year. Journalize the adjusting entry required under each of the following alternatives for determining the amount of the adjustment:

a. The amount of unexpired insurance applicable to future periods is $8,500.

	Insurance Expense
	Prepaid Insurance

b. The amount of insurance expired during the year is $22,500.

	Insurance Expense
	Prepaid Insurance

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