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What is the adjusting entry for a prepaid insurance policy?
We prepaid a one-year insurance policy for $120,000 and recorded it to prepaid expense. On 12/31, there were eight months remaining on the policy. One journal entry had been made which debited prepaid expense for $10,000 and credited $10,000 to expense. What is the adjusting entry on 12/31? Do I debit expense $50K or $80K?
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