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 $6,500 debit balance to start the year. A review of insurance policies shows that $1,800 of unexpired insurance remains at year-end