Answer:
Explanation:
The adjusting entry is shown below:
Prepaid insurance A/c Dr $3,375
To Insurance expense A/c $3,375
(Being the prepaid insurance is recorded)
The computation is shown below:
Since there is a premium to insurance expense is $4,200
For 1 year it would be
= $4,200 ÷ 2 year
= $2,100
And it is to charged for 5 months also,
= $2,100 × 5 month ÷ 12 months
= $875
So, the adjusted amount equal to
= $4,200 - $875
= $3,325
