Harrod Company paid $6100 for a 4-month insurance premium in advance on November 1, with coverage beginning on that date. The balance in the prepaid insurance account before adjustment at the end of the year is $6100, and no adjustments had been made previously. The adjusting entry required on December 31 is:
A. Debit Prepaid Insurance, $1525; credit Insurance Expense, $1525.
B. Debit Prepaid Insurance, $3050; credit Insurance Expense, $3050.
C. Debit Cash, $6100; Credit Prepaid Insurance, $6100.
D. Debit Insurance Expense, $3050; credit Prepaid Insurance, $3050.
E. Debit Insurance Expense, $1525; credit Prepaid Insurance, $1525.
Answer: D
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