Reviewing insurance policies revealed that a single policy was purchased on August 1, for one years coverage, in the amount of $6,000. There was no previous balance in the Prepaid Insurance account at that time. Based on the information provided:

1. Make the December 31 adjusting journal entry to bring the balances to correct.
2. Show the impact that these transactions had on the Prepaid Insurance account by starting with the beginning balance and ending with the ending balance in the account.