On 12/31/24, the Cheboygan Company paid $2,000 of prepaid insurance and expensed the entire amount. The policy covered the period 1/1/25 to 12/31/26. The error was discovered on 1/10/26; the 2025 books are closed. The correcting journal entry will include what entry to 1/1/26 Retained Earnings?

Select one:

a. $1,000 debit

b. $1,000 credit

c. $2,000 debit

d. $2,000 credit