The balance in the Prepaid Rent account before adjustment at the end of the year is $14,600, which represents four months' rent paid on May 1. Which of the following adjusting entries is recorded correctly on June 30?

1 DR: Prepaid Rent $3,650; CR: Rent Expense $3,650

2 DR: Rent Expense $7,300; CR: Prepaid Rent $7,300

3 DR: Rent Expense $3,650; CR: Prepaid Rent $3,650

4 DR: Prepaid Rent $14,600; CR: Cash $14,600