Use This Information to Answer the Following Question If on December 31,2010,the Insurance Still Unexpired Amounted to $20,the

question 64

Multiple Choice

Use this information to answer the following question. The trial balance for Tsung Corporation appears as follows:
$\begin{array}{c}\text {Tsung Corporation}\\\text {Trial Balance}\\\text {December 31, 2010}\\\begin{array}{|l|r|r|}\hline\text { Cash } & \$ 200 \\\text { Accounts Receivable } & 500 \\\text { Prepaid Insurance } & 50 \\\text { Supplies } & 150 \\\text { Office Equipment } & 400\\\text { Accumulated Depreciation-Office Equipment } & & \$ 200 \\\text { Accounts Payable } & & 300 \\\text { Common Stock } & &600 \\\text { Service Revenue Earned } & & 500\\\text { Salaries Expense } &100 \\\text { Rent Expense } & 200 & \\&\underline{\$ 1,600} &\underline{\$ 1,600} \\\hline\end{array}\end{array}$
If on December 31,2010,the insurance still unexpired amounted to $20,the adjusting entry would contain a

• A) debit to Prepaid Insurance for $30.
• B) credit to Prepaid Insurance for $30.
• C) debit to Insurance Expense for $20.
• D) credit to Prepaid Insurance for $20.

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Definitions:

Reversing Entries

Journal entries made at the beginning of an accounting period to reverse or cancel out adjusting entries from the end of the previous period.

Adjusting Entries

These are journal entries made in an accounting period to allocate income and expenditures to the period in which they actually occurred.

Journalize Transactions

The process of recording financial transactions in the journal as part of the accounting cycle.

Analyze Transactions

The process of examining financial transactions to understand their nature, how they affect the accounts, and how they should be recorded in the accounting system.