On january 1, a company purchased a five-year insurance policy for $2,500 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: multiple choice debit insurance expense, $500; credit prepaid insurance, $500. debit prepaid insurance, $500; credit insurance expense, $500. debit prepaid insurance, $2,000; credit insurance expense, $2,000. debit insurance expense, $500; credit prepaid insurance, $2,000. debit prepaid insurance, $2,500; credit cash, $2,500.