GB 518 Course Great Wisdom / tutorialrank.com GB 518 Course Great Wisdom / tutorialrank.com | Page 31

Property, plant and equipment are referred to
as plant assets

Question 18. Question :
On January 1 a company purchased a
five-year insurance policy for $1,800 with coverage starting
immediately. If the purchase was recorded in the Prepaid Insurance
account and the company records adjustments only at year-end, the
adjusting entry at the end of the first year is:

Debit Prepaid Insurance, $1,800; credit Cash,
$1,800

Debit Prepaid Insurance, $1,440; credit
Insurance Expense, $1,440
Debit Prepaid Insurance, $360; credit Insurance
Expense, $360

Debit Insurance Expense, $360; credit Prepaid
Insurance, $360

Debit Insurance Expense, $360; credit Prepaid
Insurance, $1,440