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21 March, 14:19

On March 15, Calloway, Inc., paid property taxes of $525,000 for the calendar year. The journal entry at March 15 to record the payment of property taxes would include which of the following?

a. A debit to Property Tax Expense of $480,000.

b. A credit to Cash of $120,000.

c. A debit to Pre paid Property Taxes of $360,000.

d. A credit to Prepaid Property Taxes of $40,000.

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  1. 21 March, 14:40
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    Solution and Explanation:

    Since an amount of $120000 will be reported as the property taxes paid, calculate the amount to be reported as a preapid expense.

    Prepaid amount = $480000 minus $120000 = $360000

    The journal entry for passing is as follows:

    date description debit credit

    3/15 property tax expense 120000

    Prepaid property taxes 360000

    cash 480000

    Thus, an amount of $360000 will be debited towards the prepaid taxes

    thus, the best choice is C, A debit to prepaid property taxes $360000
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