Briefly discuss your results

Adjusting entries for prepaid insurance

The balance in the prepaid insurance account, before adjustment at the end of the year, is $21,700. Journalize the adjusting entry required under each of the following alterna-tives for determining the amount of the adjustment:

(a) the amount of insurance expired during the year is $16,450;

(b) the amount of unexpired insurance applicable to future periods is $5,250.