Yummy Foods purchased a one-year hazard insurance policy on August 1 and recorded the $4,200 premium to prepaid insurance. At its December 31 year-end, Yummy Foods would record which of the following adjusting entries?
A) Debit Insurance Expense and credit Prepaid Insurance for $1,750.
B) Debit Prepaid Insurance and credit Insurance Expense for $1,750.
C) Debit Insurance Expense and credit Accounts Payable for $4,200.
D) Debit Insurance Expense and credit Prepaid Insurance for $2,450.
Answer: A
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