On january 1, a company purchased a five-year insurance policy for $3,700 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 insurance expense, $740; credit prepaid insurance, $740. (b) debit prepaid insurance, $3,700; credit cash, $3,700 (c) debit prepaid insurance, $2.960: credit insurance expense, $2.960. (d) debit insurance expense, $740; credit prepaid insurance, $2,960. (e) debit prepaid insurance, $740; credit insurance expense, $740.