Is there a non-owners motorcycle insurance policy available from any insurance company?

Carson company purchased a 2-year insurance policy for $4,800 on January 1, 2010. The $4,800 was debited to th?

• Carson company purchased a 2-year insurance policy for $4,800 on January 1, 2010. The $4,800 was debited to the Prepaid Insurance account. What adjustment should be made to record expired insurance January 31, 2010? A. Debit insurance expense and credit prepaid insurance for $2,400. B. Debit prepaid insurance and credit insurance expense for $200. C. Debit prepaid insurance and credit insurance expense for $400. D. Debit insurance expense and credit prepaid insurance for $200.

• Answer:

  D - 4800 divided by 24 months = 200. 4800 debited to prepaid insurance; to reduce the balance you need to credit the account. Expenses are increased by debiting.