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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