What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $9750 before adjustment, and the unexpired amount per analysis of policies is $4250?
A. Debit Cash, $9750; Credit Prepaid Insurance, $9750.
B. Debit Insurance Expense, $5500; credit Prepaid Insurance, $5500.
C. Debit Insurance Expense, $4250; credit Prepaid Insurance, $4250.
D. Debit Prepaid Insurance, $5500; credit Insurance Expense, $5500.
E. Debit Insurance Expense, $9750; credit Prepaid Insurance, $9750.
Answer: B
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