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Angel Eyes Corporation operates on a calendar year basis. The company is in its first year of operations and received its annual property tax bill on March 31 for $21,000. The bill is due May 1. Even though the company records adjusting entries on a monthly basis, no entries related to property taxes have been recorded.
-The March 31 entry to record property tax should be
A) debit property tax expense $5,250 and credit property tax payable $5,250.
B) debit property tax expense $21,000 and credit property tax payable $21,000.
C) debits to prepaid property tax and property tax expense for $15,750 and $5,250, respectively and credits to property tax payable and cash for $15,750 and $5,250, respectively.
D) debits to prepaid property tax and property tax expense for $15,750 and $5,250, respectively and credit to property tax payable for $21,000.

Question

Quizplus · Accepted Answer

The property tax expense for the first quarter is $5,250 ($21,000 x 3/12). The remaining $15,750 ($21,000 - $5,250) is a prepaid expense.

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