The journal entry to record expired prepaid factory insurance debits Blank______.

Question

Multiple choice question.

Prepaid Insurance and credits Manufacturing Overhead

Work in Process and credits Prepaid Insurance

Prepaid Insurance and credits Cash

Manufacturing Overhead and credits Prepaid Insurance

Answer 1

The correct journal entry to record expired prepaid factory insurance is:

Manufacturing Overhead and credits Prepaid Insurance.

When the prepaid insurance expires, the company recognizes the expense, which is recorded as a debit to Manufacturing Overhead (an expense account) and a credit to Prepaid Insurance (an asset account).