Practice Question 25 On July 1, Mesa Verde, Inc. purchased a 6-month insurance policy for $12,600. Prepaid Insurance was debited for the entire amount. The adjusting entries to recognize the expired cost were made each month. On December 31, when the annual financial statements are prepared, the appropriate adjusting journal entry would be Prepaid Insurance $10,500 Insurance Expense $10,500 Insurance Expense$10,500 Prepaid Insurance $10,500 Insurance Expense $2,100 Prepaid Insurance $2,100 OPrepaid Insurance $2,100 Insurance Expense $2,100