On January 1 a company purchased a five-year insurance policy for $1,800 with coverage starting immediately. If the purchase was recorded in the Prepaid Insurance account, and the company records adjustments only at year-end, the adjusting entry at the end of the first year is:
A.
Debit Prepaid Insurance, $1,800; credit Cash, $1,800.
B.
Debit Prepaid Insurance, $1,440; credit Insurance Expense, $1,440.
C.
Debit Prepaid Insurance, $360; credit Insurance Expense, $360.
D.
Debit Insurance Expense, $360; credit Prepaid Insurance, $360.
E.
Debit Insurance Expense, $360; credit Prepaid Insurance, $1,440.