On November 1, Year 1, Shumate Company paid $1,200 in advance for an insurance policy that covered the company for six months. Which of the following will be included in the adjustment required on December 31, Year 1?
A. A debit to Insurance Expense for $1,200
B. A credit to Insurance Expense for $1,200
C. A debit to Prepaid Insurance for $400
D. A credit to Prepaid Insurance for $400
Answer: D
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