QUESTION 7

1. On 8/1/19, Walton purchased 2 years of insurance in the amount of $42,000 and recorded it to prepaid insurance. At its 12/31/19 year end, Walton would recorded the following adjusting entry:

   A.

   Insurance expense	8,750
   Prepaid insurance	33,250
   Insurance payable		42,000

   B.

   Insurance expense	8,750
   Prepaid insurance		8,750

   C.

   Prepaid insurance	33,250
   Insurance expense		33,250

   D.

   Prepaid insurance	8,750
   Insurance expense		8,750