One-year insurance policy was purchased on August 1 for USD 2,400, and the
following entry was made at that time:
|
Prepaid Insurance |
2,400 |
|
|
Cash |
2,400 |
What adjusting entry is necessary at December 31, the end of the accounting year? Show how the T-accounts for Prepaid Insurance and Insurance Expense would appear after the entries are posted.