Derailed explanation plz 5. Assume that on October 30th Bryan and Abigail paid t

Question

Derailed explanation plz 5. Assume that on October 30th Bryan and Abigail paid the local radio station $3,000 representing payment in full for three months of advertising spots which began running on August 1st. Assume that they prepare proper accrual basis financial statements on a monthly basis as such any necessary adjusting entries have been made. The entry on October 30th would include: A. a debit to advertising expense for $3,000 B. a debit to pre-paid advertising expense for $3,000 C. a credit to accounts payable for $1,000 D. a credit to cash for $3,000 E. None of the above would be included as part of the entry.

Explanation / Answer

Option E is correct, none of the above would be included as part of the entry.

Correct Entry would be

Debit Advertising Expense( 3000/3) = 1000

Credit prepaid advertising expense 1000

Explanation : Advertising is prepaid for 3 months and recognized monthly , expense is recognized each month thousand and expense is debited and prepaid is credited, as while payment prepaid expenses is debited

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