The prepaid insurance account had a balance of $10,800 at the beginning of the year. The account was increased for $7,200 for premiums on policies purchased during the the year. What is the adjustment required at the end of the year for each of the following independent situations:
a) The amount of unexpired insurance applicable to future periods is $8,000.
b) The amount of insurance expired during the year is $12,675.
For (a) and (b), indicate each account affected, whether the account is increased or decreased, and the amount of the increase or decrease.