Exercise 5.2 (Algo) Calculating adjustments. LO 5-2 A firm purchased a four-year insurance policy for $15,840 on July 1, 20X1. The $15,840 was debited to the Prepaid Insurance account. On December 1, 20X1, a firm signed a contract with a local radio station for advertising that will extend over a three-year period. The firm paid $47,880 in advance and debited the amount to Prepaid Advertising