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 hana $6,500 debit balance to start the year. A review of insurance policies shows that $1,800 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. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Insurance expense Prepaid insurance Prepaid Insurance Debit Debit b. Prepaid Insurance. The Prepaid Insurance account has a $7,690 debit balance at the start of the year. A review of insurance policies shows $1,760 of Insurance has expired by year-end. 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. Insurance expense Prepaid Insurance Debit Debit