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Check my wo In its first year of operations, Roma Company reports the following: Earned revenues of $45,000 ($37,000 cash received from customers). Incurred expenses of $25,500 ($20,250 cash paid toward them). Prepaid $6,750 cash for costs that will not be expensed until next year. Compute the company's first-year net income under both the cash basis andthe accrual basis of accounting. a. Prepaid Insurance. The Prepaid Insurance account has a $4,700 debit balance to start the year. A review of insurance policies and payments shows that $900 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. Adjusting Entry repaid Insurance Insurance Expense 4,700 900 Debit DR or CR? ebit ebit Credit Prepaid Insurance 4,700 900 . Prepaid Insurance. the Prepaid Insurance account has a $5,890 debit balance at the start of the year. review of insurance oliciesand ayments shows $1 40 of insurance has expired by ear-en