On March 31, 20X8, your calendar year company takes out a 3-year
insurance policy with a premium of $5,000 per year. The entire
$15,000 is paid in advance on March 31, 20X8 and is recorded as
prepaid insurance. On December 31, 20X8, you discover that the
adjusting entry debited Insurance Expense for $5,000 and credited
Prepaid Insurance for $5,000. Your correcting journal entry will:
debit Prepaid Insurance for $1,250; credit Insurance Expense for
$1,250 debit Prepaid Insurance for $3,750; credit...