I understand that for prepaid insurance is an asset and an expense adjustment must be made. I am being confused by a couple of detail in the equation.
Prepaid Insurance Jan. 1 balance, company pays insurance on March 31, each year $3600, At Dec. 31, $600 is still prepaid. Can someone help me out.

If Dec 31 Balance is $600 in PrePaid Insurance, then your Jan 1 beginning balance will be the same amount as your Dec 31 ending balance.