Gamma Company adjusts its accounts at the end of each month. The following information has been assembled in order to prepare the required adjusting entries at December 31:

1. (1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1.

2. (2) The company's pays all employees up-to-date each Friday. Since December 31 fell on Tuesday, there was a liability to employees at December 31 for two day's pay. Employees earn a total of $12,800 per week.

3. (3) On December 1, rent on the office building had been paid for three months. The monthly rent is $7,000.

4. (4) Depreciation of office equipment is based on an estimated useful life of five years. The balance in the Office Equipment account is $12,360; no change has occurred in the account during the year.

5. (5) All fees totaling $19,800 were earned during the month for clients who had paid in advance.

What should be the balance of the Prepaid Rent?

Select one:

a. $0

b. $7,000

c. $14,000

d. $21,000