Klothing Company, a U.S. clothing designer, manufacturer, and retailer, reported a balance in prepaid insurance of $90.7 million, based on its financial reports dated March 31, 2009, the end of its fiscal year. Assume that of this balance, $24 million relates to an insurance policy with two remaining months of coverage. Give the journal entries that Klothing would make on April 30, 2009; assuming that the firm closes its books monthly. Klothing applies U.S. GAAP, and reports its results in millions of U.S. dollars.

1.Insurance Expense$ 24 million Prepaid Insurance$24 million

2.Prepaid Insurance$24 million

Insurance Expense$24 million

3.Insurance Expense$12 million

Prepaid Insurance$12 million

4.Prepaid Insurance$12 million

Insurance Expense$12 million

5.none of the above