The following transactions occurred for the Fierro Company.

A three-year fire insurance policy was purchased on July 1, 2024, for $12,240. The company debited prepaid insurance for the entire amount at the time of payment. Depreciation on equipment totaled $12,250 for the year. Employee salaries of $16,500 for the month of December will be paid in early January 2025. On November 1, 2024, the company borrowed $190,000 from a bank. The note requires principal and interest at 12% to be paid on April 30, 2025. On December 1, 2024, the company received $6,000 in cash from another company that is renting office space in Fierro’s building. The payment, representing rent for December, January, and February was credited to deferred

A three-year fire insurance policy was purchased on July 1, 2024, for $12,240. The company debited prepaid insurance for the entire amount at the time of payment. Prepare the necessary adjusting entry on December 31, 2024.