Question

On June 30, 2009, 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, 2009 for Apricot would include:

Answer 1

A debit to Management Services Expense for $1,250.

Step-by-step explanation:

The adjusting entry for apricot would include that

There is a debit to the Management Services Expense for

= $5,000 ÷ 2 years × 6 months ÷ 12 months

= $1,250

Hence, the adjusting entry for apricot would include a debit to the Management Services Expense for $1,250

The same should be considered and relevant