On September 1, 20X1, Upholstery Masters purchased a one-year insurance policy for $720. The correct adjusting entry on December 31, 20X1, is:

A. Debit Insurance Expense $60; credit Prepaid Insurance $60

B. Debit Insurance Expense $240; credit Prepaid Insurance $240

C. Debit Prepaid Insurance $60; credit Insurance Expense $60

D. Debit Prepaid Insurance $240; credit Insurance Expense $240

On September 1, 20X1, Upholstery Masters purchased a one-year insurance policy for $720. The correct adjusting entry on December 31,201, is: debit Insurance Expense $60; credit Prepaid Insurance $60 debit Insurance Expense $240; credit Prepaid Insurance $240 debit Prepaid Insurance $60; credit Insurance Expense $60 debit Prepaid Insurance $240; credit Insurance Expense $240