Gothic Architects Inc. received its annual property tax bill for $7,800 in January. It is due on February 28th. What is the journal entry that should be made in January?
A) Please see the following information: $$\begin{array} { | l | r | r | }
\hline \text { Property Tax Expense } & 650 & \
\hline \text { Prepaid Property Tax } & 7,150 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
B) Please see the following information: $$\begin{array} { | c | r | r | }
\hline \text { Property Tax Expense } & 7,800 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
C) Please see the following information: $$\begin{array} { | l | r | r | }
\hline \text { Prepaid Property Tax } & 7,800 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
D) Please see the following information: $$\begin{array} { | l | r | r | }
\hline \text { Property Tax Expense } & 650 & \
\hline \text { Property Tax Payable } & & 650 \
\hline
\end{array}$$

Question

Gothic Architects Inc. received its annual property tax bill for $7,800 in January. It is due on February 28th. What is the journal entry that should be made in January?
A) Please see the following information: $$\begin{array} { | l | r | r | } 
\hline \text { Property Tax Expense } & 650 & \
\hline \text { Prepaid Property Tax } & 7,150 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
B) Please see the following information: $$\begin{array} { | c | r | r | } 
\hline \text { Property Tax Expense } & 7,800 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
C) Please see the following information: $$\begin{array} { | l | r | r | } 
\hline \text { Prepaid Property Tax } & 7,800 & \
\hline \text { Property Tax Payable } & & 7,800 \
\hline
\end{array}$$
D) Please see the following information: $$\begin{array} { | l | r | r | } 
\hline \text { Property Tax Expense } & 650 & \
\hline \text { Property Tax Payable } & & 650 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The correct journal entry is to debit Property Tax Expense for $650 and credit Prepaid Property Tax for $7,150. This is because the company has incurred a property tax expense of $650 for the month of January, and the remaining $7,150 of the property tax bill will be prepaid for the remaining 11 months of the year.

Gothic Architects Inc B) Please See the Following Information C) Please See the Following Information