Question

On July 1 of the current calendar year, Plum Co. paid $8,700 cash for management services to be performed over a two-year period beginning July 1. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. The adjusting entry on December 31 of the current year for Plum would include_____________.

Answer 1

Step-by-step explanation:

From the above question, the adjusting entry on December 31 of the current year for Plum would include

Debit : Mgt service Exp $2,175

Credit: Prepaid Expenses $2,175

Being actual expense on Mgt services for the year.