On January $1,$ a company purchased a five$-$year insurance policy for $$3,100$ with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year$-$end, the adjusting entry at the end of the first year is:

Multiple Choice

Debit Insurance Expense, $$620$; credit Prepaid Insurance, $$2,480.$

Debit Prepaid Insurance, $$620$; credit Insurance Expense, $$620.$

Debit Prepaid Insurance, $$3,100$; credit Cash, $$3,100.$

Debit Insurance Expense, $$620$; credit Prepaid Insurance, $$620.$

Debit Prepaid Insurance, $$2,480$; credit Insurance Expense, $$2,480.$