I have a Dr. balance for Prepaid insurance of $3240 in my unadjusted trial balance as of Mar. 31.

"Three more months have passed since the company purchased the annual insurance policy at the cost of $4320."

What accounts do I use when adjusting, and for how much?

To calculate the amount of insurance you take your amount of $,4320 for your annual cost and multiply this amount by # of months used, which is 3 months divided by 12 months. So your formula will be: $4,320 * 3/12 = amount of insurance used.

Your journal entry or adjusting entry will be:
Debit Insurance Expense for the amount calculated above
Credit Prepaid Insurance for the amount calculated above