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Tumbler, Inc. bought a 4-year insurance policy on August 1 for $3,700. Assume no other adjusting entries have been done this

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Answer #1

Insurance expense for the year = Total amount*Number of months in current year/Total months

= 3700*5/48

= $385.42

Hence, the correct entry would be

D.Insurance expense debited by $385 and Credit prepaid insurance $385

(To recognize expense during the year)

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