I'm still not clear of how to correct the prepaid expense. Let's say... I paid 20,000 for 5 years of insurance and I charge all to expense account on the first year... the correct entry should be:
First year...
Debit insurance expense 4,000
Debit prepaid insurance 16,000
Credit R.E 20,000
Second year... it would be normal entry?
Debit insurance expense 4,000
Credit prepaid expense 4,000
??
