Answer:
The correct answer is C
Explanation:
The insurance policy was purchased on Dec 1 worth $3,600, so on Dec 31, the entry to be recorded is as follows:
Insurance expense A/c............................Dr $300
Prepaid insurance A/c.........................Cr $300
When the asset is charged on to the expense account then the expense account of the insurance is debited against the account of the prepaid insurance.
Working Note:
Amount = Insurance amount / Number of months
= $3,600 / 12
=$300
