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Home > Business & Careers > Accounting   »   What is the adjusting entry for a prepaid insurance policy?

 
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Old Apr 9, 2008, 12:37 PM
par125
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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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