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On July 1 Plum Co. paid $7,500 cash for management

services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment. On July 1 Plum should record:


A) A debit to an expense and credit to a prepaid expense for $7,500.


B) A debit to an expense and credit to Cash for $7,500.


C) A debit to a prepaid expense and a credit to Cash for $7,500


D) A credit to a prepaid expense and a debit to Cash for $7,500.


E) A debit to Cash for $7,500 and a credit to an expense for $7,500.

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