On 1 July 2011 Tan Traders Paid $600,representing a Two-Year

question 38

Multiple Choice

On 1 July 2011 Tan Traders paid $600,representing a two-year insurance premium.The $600 was initially recorded in the Insurance expense account.After adjustment at 31 December 2012,the close of the annual accounting period:

• A)Insurance expense in the income statement is $600 and prepaid insurance in the balance sheet is $0
• B)Insurance expense in the income statement is $150 and prepaid insurance in the balance sheet is $450
• C)Insurance expense in the income statement is $450 and prepaid insurance in the balance sheet is $0
• D)Insurance expense in the income statement is $300 and prepaid insurance in the balance sheet is $150