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 $6,700 debit balance to start the year. A review of insurance policies shows that $1,900 of unexpired insurance remains at year-end. Prepaid Insurance 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. b. Prepaid Insurance. The Prepaid Insurance account has a $7,890 debit balance at the start of the year. A review of insurance policies shows $1,840 of insurance has expired by year-end. Prepaid Insurance 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 c. Prepaid Rent. On September 1 of the current year, the company prepaid $48,000 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $48,000. Prepaid Rent 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

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