The balance in the Prepaid Rent account before adjustment at the end of the year is ¥12,000, which represents three months' rent paid on December 1.The adjusting entry required on December 31 is to

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Since three months' rent has been paid on December 1, the portion of rent that has been used during the current year (January 1 - December 31) is only 9 months (or 75% of the total amount paid). Therefore, the amount of prepaid rent that needs to be recognized as an expense in the current year is ¥4,000 (¥12,000 x 75%). To make this adjustment, we need to debit Rent Expense (an income statement account) for ¥4,000 and credit Prepaid Rent (a balance sheet account) for ¥4,000. This will reduce the balance in Prepaid Rent by ¥4,000, reflecting the portion of rent that has been used up, and recognize the same amount as an expense in the current year. The correct option is A.

The Balance in the Prepaid Rent Account Before Adjustment at the End