What is the proper adjusting entry at December 31, the end of the accounting period, if the balance in the prepaid insurance account is $7,750 before adjustment, and the unexpired amount per analysis of policies is, $3,250?
A) Debit Insurance Expense, $3,250; credit Prepaid Insurance, $3,250.
B) Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.
C) Debit Prepaid Insurance, $4,500; credit Insurance Expense, $4,500.
D) Debit Insurance Expense, $7,750; credit Prepaid Insurance, $7,750.
E) Debit Cash, $7,750; Credit Prepaid Insurance, $7,750.
B) Debit Insurance Expense, $4,500; credit Prepaid Insurance, $4,500.
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