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

question 64

Multiple Choice

Lime Limited has received its invoice for $ 75,000 for property taxes for the calendar year 2020. The invoice was received and paid in June 2020 and the entire amount was debited to Property Tax Expense. Assuming Lime does NOT prepare interim financial statements, the required adjustment on December 31, 2020, 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) No adjusting entry is required.

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Definitions:

Aorta

The largest artery in the body, transporting oxygen-rich blood from the left ventricle of the heart to various parts of the body.

Left Ventricle

The chamber of the heart that receives oxygenated blood from the left atrium and pumps it out under high pressure through the aorta to circulate throughout the body.

Oxygen-poor Blood

Refers to blood with a lower than normal oxygen content, usually returning to the heart from various parts of the body.

Superior and Inferior

Terms used to describe the relative position of body parts, with 'superior' meaning higher or above and 'inferior' meaning lower or below.