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.
Answer:D
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.