Suppose that a business purchases a 6-month general liability insurance policy for $24,000 on January 1. To record this transaction, the company debits "Prepaid Insurance" for $24,000 and credits "Cash" for $24,000. As of January 31, the company has consumed one month of insurance. What adjusting entry is necessary at January 31?
A) Insurance Expense 24,000Prepaid Insurance 24,000
B) Insurance Expense 4,000Cash 4,000
C) Prepaid Insurance 24,000Insurance Expense 24,000
D) Insurance Expense 4,000Prepaid Insurance 4,000
D
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