Problem:

On June 30, 2014, Apricot Co. paid $6,100 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) A credit to a prepaid expense for $6,100.
b) A debit to Cash for $6,100.
c) A credit to an expense for $6,100.
d) A debit to an expense for $6,100.
e) A debit to a prepaid expense for $6,100.

Note: Please provide equation and explain comprehensively and give step by step solution.