On July 1, Plum Co. paid $7,500 cash for management services to be performed over a two-year period. Plum follows a policy of recording all prepaid expenses to asset accounts at the time of cash payment.
On July 1, Plum should record:
a. A credit to a prepaid expense and a debit to Cash for $7,500.
b. A debit to Cash for $7,500 and a credit to an expense for $7,500.
c. A debit to an expense and credit to a prepaid expense for $7,500.
d. A debit to an expense and credit to Cash for $7,500.
e. A debit to a prepaid expense and a credit to Cash for $7,500.