Laramie Inc.signed a contract with a service provider for security services at a rate of $250 per month for the period of January through June.Laramie Inc.will pay the service provider the entire amount at the end of June.The company makes adjusting entries each month.During the month of June,it should record total security expense of $500.

Question

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If Laramie Inc. will pay the entire amount at the end of June, then it should record security expenses of $250 from January through May, which totals $1250. The adjusting entry for June should only record the remaining balance of $250 to be paid to the service provider, not the total expense of $500. Therefore, the statement is false.