On january 1, a company purchased a five-year insurance policy for $2,500 with coverage starting immediately. if the purchase was recorded in the prepaid insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is: multiple choice debit insurance expense, $500; credit prepaid insurance, $500. debit prepaid insurance, $500; credit insurance expense, $500. debit prepaid insurance, $2,000; credit insurance expense, $2,000. debit insurance expense, $500; credit prepaid insurance, $2,000. debit prepaid insurance, $2,500; credit cash, $2,500.

Rate of return douglas keel, a financial analyst for orange industries, wishes to estimate the rate of return for two similar-risk investments, x and y. douglas's research indicates that the immediate past returns will serve as reasonable estimates of future returns. a year earlier, investment x had a market value of $27 comma 000; and investment y had a market value of $46 comma 000. during the year, investment x generated cash flow of $2 comma 025 and investment y generated cash flow of $ 6 comma 770. the current market values of investments x and y are $28 comma 582 and $46 comma 000, respectively. a. calculate the expected rate of return on investments x and y using the most recent year's data. b. assuming that the two investments are equally risky, which one should douglas recommend? why?