Prepaid insurance expense 10000 Insurance payable 10000 01

Prepaid insurance expense 10,000 Insurance payable 10,000 ?? 01 Prepaid insurance expense 0[ Insurance expense 10,000 Insurance payable 10,000 10,000 Cash 10,000 Insurance expense 10,000 Cash 10,000

Solution

Insurance paid for next period is called advance insurance and the amount paid is booked as prepaid insurance because the benefit of the same will recived in next period. Journal Entries Date Account Title and explanation Debit Credit December 31, 2016 Prepaid insurance Expense $                  10,000         To Cash $                     10,000 Answer = Option C