Saved 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 as a $5,200 debit balance to start the year. A review of insurance policies shows that $1,150 of unexpired insurance remains at year-end. Prepaid insurance Step 1: Determine what the current account balance equals. Debit Step 2: Determine what the current account balance should equal. Debit 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 $6,390 debit balance at the start of the year. A review of insurance policies shows $1,240 of insurance has expired by year-end. 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. Prepaid insurance Debit Debit