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 3 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. . Prepaid Insurance. The Prepaid Insurance account has a $6,400 debit balance to start the year. A review of insurance policies shows that $1.750 of unexpired insurance remains at year-end. DR or CR? Prepaid insurance Step 1: Determine what the current account balance equals. 6,400 Step 2: Determine what the current account balance should equal. $ 1,750 Debit Step 3: Record the December 31, adjusting entry to get from step 1 to step 2. Adjusting Entry Insurance expense Prepaid insurance Credit b. Prepaid Insurance. The Prepaid Insurance account has a $7,590 debit balance at the start of the year. A review of insurance policies shows $1,720 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 Prepaid insurance b. Prepaid Insurance. The Prepaid Insurance account has a $7,590 debit balance at the start of the year. A review of insurance policies shows $1,720 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 step 2. c. Prepaid Rent On September 1 of the current year, the company prepaid $44,400 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $44,400. DR or CR? Prepaid rent Step 1: Determine what the current account balance equals. 44,000 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