Alonso Ltd. has insured all their cars. They often pay for the insurance at the beginning of January each year. In January 2023, Alonso has the following information about the prepaid insurance account:

Opening Balance $1,300 1st January

Closing Balance $2,500 31st January

You also are told that during January, Alonso Ltd. recognised $900 in insurance expenses.

Required:

1. Construct all the T accounts (you will need at least two) to show all the movements relevant to this question (please ignore GST).

2. Explain the reasons why you are debiting and crediting the accounts.