Lime Limited Has Received Its Invoice for $75,000 for Property

question 6

Multiple Choice

Lime Limited has received its invoice for $75,000 for property taxes for the calendar year 2017.The invoice was received and paid in June 2014 and the entire amount was debited to Property Tax Expense.Assuming Lime does NOT prepare interim financial statements, the required adjustment on December 31, 2017 related to the property taxes is

• A)debit Property Tax Expense and credit Prepaid Property Tax $31,250.
• B)debit Prepaid Property Tax and credit Property Tax Expense $37,500.
• C)debit Property Tax Expense and credit Prepaid Property Tax $37,500.
• D)Silly question: no adjusting entry is required.

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Definitions:

Scheduled Date

A pre-arranged date on which an event is planned to occur, such as a payment or meeting.

Compounded Annually

An interest calculation method where interest is added to the principal once per year, affecting the investment's growth over time.

Outstanding Principal

The remaining amount of money owed on a loan or mortgage, not including interest, that has yet to be repaid.

Equal Payments

Regular payments of the same amount made over a period of time.