Question: question the prepaid insurance balance reflect as 12month insurance policy...
Question: The prepaid insurance balance reflect as 12-month insurance policy which started on sept 1, 2018, and no adjustments were made from sept 1-Dec 31, 2018. Write the adjusting journal entry for Dec 31, 2018.
I know that based on the months used from sept to dec 31, it would cost 6000 which would debit insurance expense and credit prepaid insurance. What I'm confused about is why the unadjusted trial already has a debit of 8000 to insurance expense? Would the adjusting journal entry still just be the 6000? Or would you take into account the already existing 8000 somehow.