2. MC.03.90.ALGO (Algorithmic) Smokey Company purchases a 1 -year insurance policy on July 1 for $13,812. The adjusting entry on December 31 is a. debit Insurance Expense, $6,906; credit Prepaid Insurance, $6,906 b. debit Prepaid Insurance, $12,661; credit Cash, $12,661 c. debit Insurance Expense, $13,812; credit Prepaid Insurance, $13,812 d. debit Insurance Expense, $1,151; credit Prepaid Insurance, $13,812