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 and payments shows that $1,800 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 $7,690 debit balance at the start of the year. A review of insurance policies and payments shows $1,760 of insurance has expired by year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. 5 of 13 Next > Prev Determine what the current account balance should equal. Step 2: Step 3: Record the December 31, adjusting entry to get from step 1 to step 2 14200 b. Prepaid Insurance. The Prepaid Insurance account has a $7,690 debit balance at the start of the year. A review of insurance policies and payments shows $1,760 of insurance has expired by year-end. Book Prepaid Insurance Step 1: Determine what the current account balance equals. Hint Step 2: Determine what the current account balance should equal Print Step 3: Record the December 31, adjusting entry to get from step 1 to step 2 erences c. Prepaid Rent. On September 1 of the current year, the company prepaid $45 600 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $45,600. Prepaid Rent Step 1: Determine what the current account balance equals. Step 2: Detemine what the current account balance should equal. Step 3: Record the December 31, adjusting entry to get from step 1 to step 2 5 of 13 Prev Next