can anyone help me with this accounting question?

Question

33

The balance in the prepaid insurance account before adjustment at the end of the year is $10,000. If the additional data for the adjusting entry is (1) "the amount of insurance expired during the year is $8,500," as compared to additional data stating (2) "the amount of unexpired insurance applicable to a future period is $1,500," for the adjusting entry:

A. the debit and credit amount for (1) would be the same as (2) but the accounts would be different

B. the accounts for (1) would be the same as the accounts for (2) but the amounts would be different

C. the accounts and amounts would be the same for both (1) and (2)

D. there is not enough information given to determine the correct accounts and amounts

Answer 1

c..they are saying the same thing.... expense amount is $8500 balance in prepaid account is $1500

C for sure

Answer 2

C. is correct. basically they are saying in (1) that $8500 expired so you would expense $8500. in (2) $1500 is applicable to a future period, and therefore this should be what remains in prepaid insurance at the end of the year. you would also need to expense $8500. here is the journal entry

Debit Insurance expense 8500
Credit Prepaid insurance 8500

since you are crediting an asset account, you are decreasing it. the prepaid insurance account will now be 10000-8500=1500.