Klothing Company, a U.S. clothing designer, manufacturer, and retailer, reported a balance in prepaid insurance of $90.7 million, based on its financial reports dated March 31, 2013, the end of its fiscal year. Assume that of this balance, $24 million relates to an insurance policy with two remaining months of coverage. Select the correct journal entries that Klothing would make on April 30, 2013
(Assume that the firm closes its books monthly. Klothing applies U.S. GAAP, and reports its results in millions of U.S. dollars.)
a. Insurance Expense $ 24 million
Prepaid Insurance $24 million
b. Prepaid Insurance $24 million
Insurance Expense $24 million
c. Insurance Expense $12 million
Prepaid Insurance $12 million
d. Prepaid Insurance $12 million
Insurance Expense $12 million
e. none of the above
C
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