What Is the Proper Adjusting Entry at December 31, the End

question 117

Multiple Choice

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.

Recognize the role of price reductions in facilitating the sale of damaged or defective merchandise.

Identify the key differences between a single-step and a multiple-step income statement.

Understand the classification and significance of general and administrative expenses in supporting company operations.

Calculate inventory shrinkage and comprehend its impact on financial records.

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