On June 30, 2014, Apricot Co. paid $6,100 cash for management services to be per

Question

On June 30, 2014, Apricot Co. paid $6,100 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30, 2014 Apricot should record:

On June 30, 2014, Apricot Co. paid $6,100 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30, 2014 Apricot should record:

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Option E (A debit to a prepaid expense for $6,100) is the correct answer.

Explanation:

Journal Entry:

Prepaid Expense Dr. 6100

Cash Cr. 6100

Thanks.

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