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On June, 30, 2015, a company purchased a two-year insurance policy for $18,000, paying cash and debiting Prepaid Insurance for the entire two-year premium amount.

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On June, 30, 2015, a company purchased a two-year insurance policy for $18,000, paying cash and debiting Prepaid Insurance for the entire two-year premium amount. The adjusting entry on December 31, 2015 includes debit to Insurance expense $9,000. credit to Insurance Expense $4,500. credit to Prepaid Insurance $4,500. credit to Prepaid Insurance $9,000

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