Account for insurance expense. (LO 1,3)

Bovina Company was started on January 1, 2005. During its first week of business, the company paid \(\$ 3,600\) for 18 months' worth of fire insurance with an effective date of January 1 . When Bovina Company prepares its income statement for the year ended December 31, 2005, how much prepaid insurance will be shown on the balance sheet, and how much insurance expense will be shown on the income statement? Is this adjustment an accrual or deferral?