I don't understand why I'm crediting retained earnings. It is because prepaid insurance is an Asset and that amount in the prepaid account (asset) is increasing retained earnings as well? why am I not crediting cash instead?

f. A three-year liability insurance policy was purchased at the beginning of 2020 for $71,700. The full premium was debited to insurance expense at the time. Required: For each error, prepare any journal entry necessary to correct the error, as well as any year-end adjusting entry for 2021 related to the situation described. (Ignore income taxes.) (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record entry necessary for error correction. Note: Enter debits before credits Debit Credit Transaction f(1) General Journal Prepaid insurance 47,800 Retained earnings 47,800 Record entry Clear entry View general journal