GB 518 RANK Let's Do This /gb518rank.com GB 518 RANK Let's Do This /gb518rank.com | Page 13

A credit to a liability for $1,250
Question 24. 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 Insuran ce, $360; credit
Insurance Expense, $360
Debit Insurance Expense, $360; credit
Prepaid Insurance, $360
Debit Insurance Expense, $360; credit
Prepaid Insurance, $1,440
Question 25. Question :
The adjusted trial balance
contains information pertaining to:
Asset accounts only