Waterway Industries paid cash of $145500 on June 1, 2020 for one years rent in advance and recorded the transaction with a debit to Prepaid Rent. The December 31, 2020 adjusting entry is debit Prepaid Rent and credit Rent Expense, $60625. debit Prepaid Rent and credit Rent Expense, $84875. debit Rent Expense and credit Prepaid Rent, $84875. debit Prepaid Rent and credit Cash, $60625.