Alejandro Consulting Paid $2,500 Cash for a 5-Month Insurance Policy $\begin{array}{|l|r|r|}\hline \text { Insurance Expense } & 2,500 & \\\hline \text { Cash } & & 2,500 \\\hline\end{array}$

question 148

Multiple Choice

Alejandro Consulting paid $2,500 cash for a 5-month insurance policy that begins on March 1. Given the choices below, determine the general journal entry that Alejandro Consulting will make to record the cash payment. Assume the company's policy is to initially record prepaid and unearned items in balance sheet accounts.

• A) \(\begin{array}{|l|r|r|}
• \hline \text { Insurance Expense } & 2,500 & \\
• \hline \text { Cash } & & 2,500 \\
• \hline
• \end{array}\)
• B) \(\begin{array}{|l|r|l|}
• \hline \text { Cash } & 2,500 \\
• \hline \text { Insurance Expense } && 2,500 \\
• \hline
• \end{array}\)
• C) \(\begin{array}{|l|r|}
• \hline \text { Cash } & 2,500 \\
• \hline \text { Prepaid Insurance } & 2,500\\\hline
• \end{array}\)
• D) \(\begin{array}{|l|r|r|}
• \hline \text { Prepaid Insurance } & 2,500 & \\
• \hline \text { Cash } & & 2,500 \\
• \hline
• \end{array}\)
• E) \(\begin{array}{|l|r|r|}
• \hline \text { Insurance Expense } & 2,500 & \\
• \hline \text { Prepaid Insurance } & & 2,500 \\
• \hline
• \end{array}\)

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Definitions:

Decimal Places

The positions to the right of the decimal point in a number, each place representing a power of ten in the base ten number system.

Logarithmic Equation

A mathematical equation involving a logarithm of a variable or expression, often used to solve for variables in exponential functions.

Decimal Places

Positions to the right of a decimal point in a number, indicating fractions of a whole.

Exponential Equation

An equation in which the variable appears in an exponent.