On January 1, 2020, Peach Company purchased a five-year insurance policy for $5,000. If the cost was debited to Prepaid Insurance, the adjusting entry at the end of 2020 is :

A. Debit Prepaid Insurance, $1,800; credit Cash, $1,800 

B. Debit Prepaid Insurance, $1,000; credit Insurance Expense, $1,000

C. Debit Prepaid Insurance, $360; credit Insurance Expense, $360 

D. Debit Insurance Expense, $360; credit Prepaid Insurance, $360 

E. Debit Insurance Expense, $1,000, credit Prepaid Insurance $1,000

Answer rating: 100% (QA)

Answer E Debit Insurance Expense 1000 credit Prepa... View the full answer