7. On December 31, Carmack Company's Prepaid Insurance account had a balance before adjustment of $6,000. The insurance was purchased on July 1 of the same year for one year of insurance coverage, with coverage beginning on that date. Assuming adjustments are only made at year-end, the adjusting entry needed on December 31 is: A) Debit Prepaid Insurance $6,000; credit Cash $6,000. B) Debit Insurance Expense $3,000; credit Accounts Payable $3,000. C) Debit Insurance Expense $3,000; credit Prepaid Insurance $3,000. D) Debit Cash $6,000; credit Prepaid Insurance $6,000. E) Debit Insurance Expense $6,000; credit Accounts Payable $6,000. 8. On December 31, Winters Company's Prepaid Rent account had a balance before adjustment of $6,000. Three months' rent was paid in advance on December 1, the first day of the lease term. The adjusting entry needed on December 31 is: A) Debit Prepaid Rent $6,000; credit Cash $6,000. B) Debit Rent Expense $2,000; credit Accounts Payable $2,000. C) Debit Rent Expense $2,000; credit Prepaid Rent $2,000. D) Debit Cash $2,000; credit Prepaid Rent $2,000. E) Debit Rent Expense $6,000; credit Accounts Payable $6,000