Question
Master Plumbers Pty Ltd provides the following Trial Balance (Extract) at 30 June 2021. Disregard GST Chart of Account Accounts Debit Credit 580 Insurance expense
Master Plumbers Pty Ltd provides the following Trial Balance (Extract) at 30 June 2021.
Disregard GST
Chart of Account Accounts Debit Credit
580 Insurance expense $4,000
124 Prepaid insurance $8,400
Additional information:
The balance of the Prepaid insurance account is the annual (yearly) premium for insurance commencing on 1 January 2021. The insurance premium (policy) is due on 1 January every year. On 1 January 2021, there was an increase in the insurance premium (payment) for this policy.
Required:
What would be the closing entry for insurance expense as at 30 June 2021 in the general ledger?
Group of answer choices
Debit (DR): Profit & Loss account $8,200 and Credit (CR): Insurance expense $8,200.
Debit (DR): Profit & Loss account $4,000 and Credit (CR): Insurance expense $4,000
Debit (DR): Insurance expense $4,000 and Credit (CR): Profit & Loss account $4,000
Debit (DR): Insurance expense $8,200 and Credit (CR): Profit & Loss account $8,200
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