On October $1,$ a company paid $$12,000$ for a prepaid insurance policy covering $12$ months. What is the correct adjusting entry related to this account if financial statements are prepared on December $31?$

debit Insurance expense $$3,000$; credit Prepaid insurance, $$3,000.$

debit Insurance expense $$2,000$; credit Prepaid insurance, $$2,000.$

debit Prepaid insurance $$12,000$; credit Cash, $$12,000.$

D

debit Prepaid Insurance $9,000$; credit Insurance expense $9,000.$