Laramie Company signed a contract with a service provider for security services at a rate of $270 per month for the period of January through June.Laramie Company will pay the service provider the entire amount at the end of June.The company makes adjusting entries each month.During the month of June,it should record total security expense of $540.

Question

Quizplus · Accepted Answer

Since Laramie Company will pay the service provider the entire amount at the end of June, the adjusting entry for June should only record the expense for the portion of the service used in June, which is $270. Therefore, the total security expense recorded for June should be $270, not $540.

Laramie Company Signed a Contract with a Service Provider for Security