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  3. on july 1 of the current calendar year, plum co. p

On July 1 of the current calendar year, Plum Co. paid $7,500 cash for management...

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Accounting

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On July 1 of the current calendar year, Plum Co. paid $7,500 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: A) A debit to an expense and a credit to a prepaid expense for $5.625. B) A debit to a prepaid expense and a credit to Cash for $5,625. OC) A debit to an expense and a credit to a prepaid expense for $1.875. OD) A debit to a prepaid expense and a credit to an expense for $1.875. E) A credit to a liability and a debit to a prepaid expense for $1,875

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