A Company Made the Following Entry on January 1, Year $$\begin{array} { | l | l | l | } \hline \text { Insurance expense } & 36,000 & \\\hline \text { Cash } & & 36,000 \\\hline\end{array}$$

A company made the following entry on January 1, year 1, to record the total premium paid for a three-year insurance policy: $$\begin{array} { | l | l | l | } \hline \text { Insurance expense } & 36,000 & \\\hline \text { Cash } & & 36,000 \\\hline\end{array}$$ The December 31, year 1, balance sheet should report the following amounts: $\begin{array}{|l|l|l|}\hline &\text { Prepaid Insurance } & \text { Deferred Charge } \\\hline1& \$ 24,000 & \text { None } \\\hline 2&\text { None } & \$ 12,000 \\\hline3& \$ 12,000 & \text { None } \\\hline 4&\$ 12,000 & \$ 12,000 \\\hline\end{array}$

A) Choice 1
B) Choice 2
C) Choice 3
D) Choice 4