On July 1 Plum Co paid 7500 cash for management services to

On July 1 Plum Co. paid $7,500 cash for management services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Plum should record:

- is this right?

Multiple Choice A debit to a prepaid expense and a credit to Cash for $7,500. A debit to an expense and credit to a prepaid expense for $7,500 A debit to Cash for $7,500 and a credit to an expense for $7,500 A debit to an expense and credit to Cash for $7,500. A credit to a prepaid expense and a debit to Cash for $7,500.

Solution

Answer is A

Date	General Journal	Debit	Credit
July 1	Prepaid expense	$7,500
	Cash		$7,500