Marcy's Event Planning Services Company records deferred expenses and deferred revenues using the alternative treatments.The business makes adjusting entries as needed to bring its books to the full accrual basis once a year at the end of the year.On October 1,Marcy's paid $3,600 for insurance for a one-year period.Coverage begins on October 1.At the end of the year,it will make an adjusting entry that debits Insurance Expense for $1,500.

Question

Quizplus · Accepted Answer

Adjusting entry will debit Prepaid Insurance for $2,700 and credit Insurance Expense for $2,700.
$3,600 × 9/12 = $2,700

Marcy's Event Planning Services Company Records Deferred Expenses and Deferred