A four-year insurance policy in the amount of $40,000 was purchased one year ago. What is the adjusting entry to record insurance expense for the current year?
DEBIT: Prepaid Insurance for $40,000; CREDIT: Insurance Expense for $40,000
DEBIT: Prepaid Insurance for $10,000; CREDIT: Insurance Expense for $10,000
DEBIT: Insurance Expense for $40,000; CREDIT: Prepaid Insurance for $40,000
DEBIT: Insurance Expense for $10,000; CREDIT: Prepaid Insurance for $10,000