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2 November, 07:52

On July 1 of the current calendar year. Olive Co paid 7700 cash for management services to be performed over a two year period beginning July 1. Olive 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 Olive would include

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  1. 2 November, 10:23
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    Answer: d c

    Prepaid expenses 7.700

    Cash 7.700

    Managment services expense 1.925

    Prepaid expenses 1.925

    Explanation:

    Paid 1-jul 7700

    Two Years 7.700 24 months

    Monthly 321 month

    Current Year 1.925 6 months

    .

    You must record the expense of the current year which is six months. (1.925)
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