2 . Original entry ( Aug 1 ) Insurance Expense 3, 600 Cash 3, 600 3 , 600 / 12 months = 300 / month ( 5 months have been used as of Dec 31 - 1, 500 used 18 2 , 100 left prepaid ) Adjusting Entry ( Dec 31 ) Prepaid Insurance 2 , 100 Insurance Expense 2, 100 Answer - Credit to Insurance Expense for 2 , 100