For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year a. Prepaid Insurance. The Prepaid Insurance account has a $4,800 debit balance to start the year. A review of insurance policies shows that $950 of unexpired insurance remains at year-end. Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal DR or CR? $ 4,800 Debit Prepaid Insurance 4,800 $ 950 Credit Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Adjusting Entry Debit Credit Insurance expense 3,850 Prepaid insurance 3,850 4,800 950