Upholstery Masters will record an adjusting entry on December 31 of Debit to Insurance expense and credit to Prepaid insurance of $360.
What would Upholstery Masters record?
The insurance is for a year so the amount that will be recorded in 20X1 will be for months in 20X1.
The number of months used in 20X1 was 4 months from September to Decemeber.
The relevant amount will be:
= 360 / 12 x 4 months
= $120
This amount will be debited to the Insurance expense account and credited to the Prepaid insurance account.
Find out more on Prepaid insurance at https://brainly.com/question/25190564.
