On June 30,2011,Apricot Co

Multiple Choice

On June 30,2011,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 31,2011 for Apricot would include:

A) A debit to an expense for $1,250
B) A debit to a prepaid expense for $1,250
C) A credit to an expense for $3,750
D) A debit to a prepaid expense for $3,750
E) A credit to a liability for $1,250