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A Company prepares annual financial statements. On May 1, 2019, the Company paid $60,000 in advance...

A Company prepares annual financial statements. On May 1, 2019, the Company paid $60,000 in advance for a two-year insurance policy. After the adjusting entry on December 31, 2019, what will X Company's 2019 financial statements show?

Prepaid Insurance, $20,000; Insurance expense, $40,000
Prepaid Insurance, $0; Insurance expense, $60,000
Prepaid Insurance, $52,500;   Insurance expense, $7,500
Prepaid Insurance, $60,000; Insurance expense, $0
Prepaid Insurance, $40,000; Insurance expense, $20,000
Prepaid Insurance, $7,500;   Insurance expense, $52,500

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