Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?
A) $$\begin{array} { | l | l | }
\hline{ \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Insurance Expense } & \text { Prepaid Insurance } \
\hline \text { Cash } & \text { Insurance Expense } \
\hline
\end{array}$$
B) $$\begin{array} { | l | l | }
\hline { \text { Initial Entry } } &{ \text { Adjusting Entry } } \
\hline \text { Cash } & \text { Prepaid Insurance } \
\hline \text { Insurance Expense } & \text { Insurance Expense } \
\hline
\end{array}$$
C) $$\begin{array} { | l | l | }
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Prepaid Insurance } \
\hline \text { Cash } & \text { Insurance Expense } \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | }
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Insurance Expense } \
\hline \text { Cash } & \text { Prepaid Insurance } \
\hline
\end{array}$$
E) $$\begin{array} { | l | l | }
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Cash } \
\hline \text { Insurance Expense } & \text { Prepaid Insurance } \
\hline
\end{array}$$

Question

Under the alternative method for recording prepaid expenses,which is the correct set of journal entries?
A) $$\begin{array} { | l | l | } 
\hline{ \text { Initial Entry } } &  { \text { Adjusting Entry } } \
\hline \text { Insurance Expense } & \text { Prepaid Insurance } \
\hline \text { Cash } & \text { Insurance Expense } \
\hline
\end{array}$$
B) $$\begin{array} { | l | l | } 
\hline { \text { Initial Entry } } &{ \text { Adjusting Entry } } \
\hline \text { Cash } & \text { Prepaid Insurance } \
\hline \text { Insurance Expense } & \text { Insurance Expense } \
\hline
\end{array}$$
C) $$\begin{array} { | l | l | } 
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Prepaid Insurance } \
\hline \text { Cash } & \text { Insurance Expense } \
\hline
\end{array}$$
D) $$\begin{array} { | l | l | } 
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Insurance Expense } \
\hline \text { Cash } & \text { Prepaid Insurance } \
\hline
\end{array}$$
E) $$\begin{array} { | l | l | } 
\hline { \text { Initial Entry } } & { \text { Adjusting Entry } } \
\hline \text { Prepaid Insurance } & \text { Cash } \
\hline \text { Insurance Expense } & \text { Prepaid Insurance } \
\hline
\end{array}$$

Quizplus · Accepted Answer

Under the alternative method for recording prepaid expenses, the initial entry records the asset (Prepaid Insurance) and the cash paid. The adjusting entry records the expense (Insurance Expense) and reduces the asset (Prepaid Insurance).

Under the Alternative Method for Recording Prepaid Expenses,which Is the Correct