What is the proper adjusting entry at December 31 , the end of the accounting period, if the balance in the prepaid insurance account \( \$ 9,450 \) before adjustment, and the unexpired amount per analysis of policies is \( \$ 4,100 \) ?

To determine the proper adjusting entry for the prepaid insurance account, we need to follow these steps: 1. **Identify the known values:** - Balance in the prepaid insurance account before adjustment: \( \$9,450 \) - Unexpired amount of insurance per analysis: \( \$4,100 \) 2. **Calculate the amount to be adjusted:** - The amount that has expired (and thus needs to be adjusted) can be calculated by subtracting the unexpired amount from the balance before adjustment: \[ \text{Expired Insurance} = \text{Prepaid Insurance} - \text{Unexpired Amount} \] Substituting the known values: \[ \text{Expired Insurance} = 9,450 - 4,100 \] 3. **Perform the calculation:** \[ \text{Expired Insurance} = 5,350 \] 4. **Determine the adjusting entry:** - The adjusting entry will involve debiting the insurance expense account and crediting the prepaid insurance account for the amount that has expired. Thus, the adjusting entry at December 31 will be: - Debit Insurance Expense: \( \$5,350 \) - Credit Prepaid Insurance: \( \$5,350 \) This entry reflects the insurance that has been used up during the accounting period.