On June 30,2014,Apricot Co.paid $5,000 cash for management services to be performed over a two-year period.Apricot follows a policy of recording all prepaid expenses in asset accounts at the time of cash payment. On June 30,2014 Apricot should record a:

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According to the policy of recording prepaid expenses in asset accounts at the time of cash payment, Apricot should record a debit to a prepaid expense account for $5,000 on June 30,2014. This reflects the fact that Apricot has paid for services in advance and has the right to use those services over the next two years.