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44 votes
On June 30, 2014, Apricot Co. paid $5,000 cash for management services to be performed over a two-year period. Apricot follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31, 2014,for Apricot would include:

User Ali Salehi
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1 Answer

13 votes
13 votes

Answer:

A debit to Management Services Expense for $1,250

Step-by-step explanation:

The adjusting entry should be

Management Services Expense Dr ($5,000 ÷ 2 × 6 ÷12) $1,250

To Cash $1,250

(being cash paid is recorded)

Here cash is debited as it increased the expense and cash is credited as it decreased the assets

Hence, the same should be considered

User Wisew
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