The balance in the prepaid rent account before adjustment at the end of the year is $12,000 and represents four months rent paid on December 1. The adjusting entry required on December 31 is: 1) debit Prepaid Rent, $3,000; credit Rent Expense $3,000. 2) debit Prepaid Rent, $8,000; credit Rent Expense, $8,000. 3) debit Rent Expense 33,000; credit Prepaid Rent, $3,000. 4) debit Rent Expense, $4,000; credit Prepaid Rent, $4,000.