On January 1, a company purchased a five-year insurance policy for $2,100 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:

• a Debit Prepaid Insurance, $2,100; credit Cash, $2,100.

• b Debit Prepaid Insurance, $1,680; credit Insurance Expense, $1,680.

• c Debit Prepaid Insurance, $420; credit Insurance Expense, $420.

• d Debit Insurance Expense, $420; credit Prepaid Insurance, $420.

• e Debit Insurance Expense, $420; credit Prepaid Insurance, $1,680.