Insurance expense was accrued in the wrong year. $32,000 insurance expense was accrued in January 2009. It should have been accrued in December of 2008. Was thinking about making a journal entry to accrue a prepaid expense in 2008 and reverse it in 2009. Is there anything I'm missing. Can anyone help with the adjusting journal entries?

You're going to have to explain this a bit better. Accruing an expense is not the same thing as putting something into a prepaid, so I'm not making the connection here. If the expense was supposed to be in 2008, you aren't going to fix that by putting it into a prepaid in 2008 because that's an asset and it will still be in the wrong place.

Also, if by reversing it, the intent is to get the expense out of 2009, I have to assume that means that prepaid entry would dr the expense and cr the prepaid (which isn't what you said), because then reversing it in 2009 would cause a cr to the expense and wipe out the expense you accidentally put in there, creating a net zero in the expense account. However, I'm not sure that's what you're actually trying to do, and you'd still end up with a lost expense that's pretty big.

The proper way to do this is to adjust it to the beginning retained earnings balance. If you do comparative income statements, you're also supposed to show the expense for 2008. That can get a little tricky if you're using software that won't allow you to do that last part.