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 1to step 2. Assume no other adjusting entries are made during the year a. Prepaid Insurance. The Prepaid Insurance account has a $6,500 debit balance to start the year. A review of insurance policies shows that $1,800 of unexpired insurance remains at year-end. Prepaid Insurance Step 1: Determine what the current account balance equals Debit Credit 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 $7,690 debit balance at the start of the year. A review of insurance policies shows $1,760 of insurance has expired by year-end