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 $7,390 debit balance at the start of the year. A review of insurance olicies shows \$1.640 of insurance has exnired hv vear-end. c. Prepaid Rent. On September 1 of the current year, the company prepaid $42,000 for two years of rent for facilities being occupied that day. The company debited Prepaid Rent and credited Cash for $42,000. Step 1: Determine what the current account balance equals. Stop 2: Determine what the current acocunt balance should equal. Step 3: Record the December 31 adjusting entry to get from step 1 to step 2