What would the adjusting journal entry be... On 7/1/10, Cardinal purchased a three-year fire insurance policy for $30,000 paying the full amount on that day. Cardinal recorded the $30,000 in General & Administrative Expense.

Debit Prepaid Insurance for $30,000 and Credit Cash for $30,000
Each month, the prepaid insurance is amortized or expensed at the rate of 1/36 x $30,000 = $833.33
So, at 12/31, you would have Prepaid Insurance of $25,000 and insurance expense of $5,000 (6x$833.33)

Sorry, Credit General & Administrative for $30,000... not cash... I didn't see that part initially.