I have a computer simulation project for principles of accounting and I am stuck on this entry. The question posted is: A total of $985 worth of media advertising, paid for and correctly charged to the Advertising expense account, will be received/used in the first two weeks of July(third quarter). I am adjusting on June 30, for the end of the second quarter.
I did the entry as such: Dr. Prepaid Advertising 985.00
Cr. Advertising Expense 985.00
Is this right?

Quote:

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Originally Posted by mocgirl5

I have a computer simulation project for principles of accounting and i am stuck on this entry. The question posted is: A total of $985 worth of media advertising, paid for and correctly charged to the Advertising expense account, will be received/used in the first two weeks of July(third quarter). I am adjusting on June 30, for the end of the second quarter.
I did the entry as such: Dr. Prepaid Advertising 985.00
Cr. Advertising Expense 985.00
Is this right?

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It's correct.

Mocgirl, you answer is not correct.

You are prepaying for advertising services.

Therefore, the JE is:
Dr. Prepaid Advertising 985 (which you did)
Cr. CASH 985

Once the services are rendered (so in the first 2 weeks of July), you will:
Dr. ADVERTISING EXPENSE 985
Cr. Prepaid Advertising 985

Hi CaptainForest,

Just want to comment that the advertising expense has been paid for and correctly recorded in the advertising expense. So there is no need to cr cash again.