The unadjusted trial balance columns of the work sheet show the balance in the Prepaid Insurance account at $2,250. The adjustments columns show that $625 of this insurance was used during the period. Assuming there is no other charges to insurance expense during the year, what amount would be shown as Insurance Expense in the income statement columns?
A) $1,625 debit.
B) $625 credit.
C) $625 debit.
D) $2,250 debit.

Question

Quizplus · Accepted Answer

The adjustment of $625 shows that the prepaid portion of insurance has been used up during the period and should be moved from the asset account to an expense account. Therefore, $625 should be debited to Insurance Expense in the income statement columns of the worksheet.

The Unadjusted Trial Balance Columns of the Work Sheet Show