Sample Company pays $12,000 on October 1 for a one year insurance policy. The company follows the alternative for deferrals by debiting insurance expense on October 1. What is the proper adjusting entry on December 31? debit insurance expense and credit prepaid insurance for $3,000 debit insurance expense and credit prepaid insurance for $9,000 debit prepaid insurance and credit insurance expense for $3,000 debit prepaid insurance and credit insurance expense for $9,000