Gates Accounting Services (GAS), a sole proprietorship, entered into a new 18- month office space contract on September 15, Year 1, paying the full $ 36,000 rent contract to the real estate company on that day (lease expiration March 15, Year 3). Assuming that GAS reports on a calendar year- end and that journal entries are posted on a quarterly basis ( only), what adjusting journal entry (if any) would be made to the prepaid rent account prior to closing the December 31, Year 1, financial statements?
a. Debit prepaid rent $ 8,000.
b. Credit prepaid rent $ 6,000.
c. Credit prepaid rent $ 7,000.
d. No adjusting entry made.