A two-year damage insurance policy was purchased on October 1, 2021, for 7,200. The firm debited insurance expense for the entire amount. The necessary adjusting entry on December 31, 2021, should be:

a. Debit: Insurance expenses, 7,200; Credit: Prepaid insurance expenses, 7,200

b. Debit: Prepaid insurance expenses, 6,300; Credit: Insurance expenses, 6,300

c. Debit: Cash, 7,200; Credit: Insurance expenses, 7,200

d. Debit: Cash, 900; Credit: Prepaid insurance expenses, 900

e. None of the given answers is correct.