Exercise 1: a. Prepaid Insurance: At the beginning of the year the PREPAID INSURANCE account had a balance of $1,600, insurance coverage for January through April. On 5/1 $6,000 was paid for 12 more months of insurance coverage. PREPAID INSURANCE 1/1 5/1 12/31 12/31 Insurance expense Prepaid insurance INSURANCE EXPENSE reported on the Income Statement? PREPAID INSURANCE reported on the Balance Sheet? b. Prepaid Insurance: The balance in the PREPAID INSURANCE account at 1/1 was $3,360. No additional insurance coverage was purchased during the year. Assume that the amount of insurance coverage that was used up or expired, the INSURANCE EXPENSE, during the year is $2,240. PREPAID INSURANCE 1/1 12/31 12/31 INSURANCE EXPENSE reported on the Income Statement? PREPAID INSURANCE reported on the Balance Sheet? 721 words TX