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    Mamush's Avatar
    Mamush Posts: 2, Reputation: 1
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    #1

    Apr 21, 2009, 10:28 AM
    I am a little confused on how it record this adjusting entry.
    The Question is...

    A total of $430 worth of advertising copy, paid for in advance and correctly charged to the Advertising Expense account, will be received early next quarter.


    What is the logical right answer for this data?
    pready's Avatar
    pready Posts: 3,197, Reputation: 207
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    #2

    Apr 21, 2009, 03:15 PM

    If your finacancials are prepared before you receive the advertising service, then you must do an adjusting entry.

    The adjusting entgry will be
    Debit PrePaid Advertising for the amount paid
    Credit Advertising Expense for the amount paid.

    After the service has been provided then the journal entry will be:
    Debit Advertising Expense for the amount
    Credit PrePaid Advertising for the amount
    TOD's Avatar
    TOD Posts: 1, Reputation: 1
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    #3

    May 12, 2009, 10:57 AM

    If the expense has already been recorded, and the service has not been received, why the need for the adjusting entry? Isn't the adjusting entry provided removing the expense, and removing the credit from the prepaid account?

    It would seem to me that no entry would be required..
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