question 44 of 47\non october 1, 2024, golde company paid $15,000 for one - year of insurance for the…
question 44 of 47\non october 1, 2024, golde company paid $15,000 for one - year of insurance for the period, october 1, 2024 through september 30, 2025. which of the following will be part of the adjusting entry on december 31, 2024?\na. debit insurance expense for $11,250\nb. debit insurance expense for $3,750\nc. debit prepaid insurance for $3,750\nd. debit prepaid insurance for $11,250
Answer
Explanation:
Step1: Calculate monthly insurance expense
The annual insurance payment is $15,000 for 12 - month period. So the monthly insurance expense is $\frac{15000}{12}= 1250$.
Step2: Determine number of months passed
From October 1, 2024 to December 31, 2024, 3 months have passed.
Step3: Calculate insurance expense for the period
The insurance expense for 3 months is $1250\times3 = 3750$. When recording the adjusting - entry, we debit Insurance Expense (to recognize the expense incurred) and credit Prepaid Insurance (to reduce the prepaid amount).
Answer:
B. Debit Insurance Expense for $3,750