Question

On August 1, Richardson Company paid $9,900 for one year of advertising in advance. On August 1, Richardson Company debited Advertising Expense, which is an alternate way of recording the initial expenditure. Assume that the advertising is used evenly throughout the year. Required: Journalize the adjusting entry on December 31.

Answer 1

A journal entry for Richardson Company was prepared and is shown below.

Step-by-step explanation:

Solution

A JOURNAL ENTRY FOR RICHARDSON COMPANY

Date Account Title Debit Credit

Dec 31 Prepared Advertising ($9900 *1/12) 825

Advertising expenses 825

To record for insurance the adjusting entry

Thus,

The advertising expense for the month elapsed in the present year. therefore a one month prepared advertising was deducted or debited.