Answer:
A. Dr Insurance expense $20,250
Cr Prepaid Insurance $20,250
B. Dr Insurance expense $20,250
Cr Prepaid Insurance $20,250
Explanation:
A. Preparation of the journal entry for The amount of insurance expired during the year
Dr Insurance expense $20,250
Cr Prepaid Insurance $20,250
(To record insurance expired)
B. Preparation of the journal entry for the unexpired insurance applicable to future periods
Dr Insurance expense ($27,000 - $6,750) $20,250
Cr Prepaid Insurance $20,250
(To record insurance expired)