QS 3-5 Prepaid (deferred) expenses adjustments LO P1 For each separate case below, follow the three-step process for adjusting the prepaid asset account at December 31 Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2. Assume no other adjusting entries are made during the year. a. Prepaid Insurance. The Prepaid Insurance account has a $6,100 debit balance to start the year. A review of Insurance policies shows that $1,100 of unexpired Insurance remains at year-end Prepaid Insurance Step 1 Determine what the current account balance equals. Step 2: Determine what the current account balance should equal Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. b. Prepaid Insurance. The Prepaid Insurance account has a $6,290 debit balance at the start of the year. A review of Insurance policies shows $1,200 of insurance has expired by year-end. Prepaid Insurance Step 1: Determine what the current account balance equals. Step 2: Determine what the current account balance should equal Step 3: Record the December 31, adjusting entry to get from step 1 to stop 2 c. Prepaid Rent On September 1 of the current year, the company prepaid $28,800 for two years of rent for facilities being occupled that day. The company debited Prepaid Rent and credited Cash for $28,800. c. Prepaid Rent. On September 1 of the current year, the company prepaid $28,800 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $28,800. ELS Prepaid Rent Prepaid Step 1: Determine what the current account balance equals. Stop 2: Determine what the current account balance should equal Step 3: Record the December 31, adjusting entry to get from step 1 to stop 2