Question

Piece of Time is a manufacturer of wrist watches and relies heavily on advertising to promote its products. Its partially filled Prepaid Advertising account below is missing an additional $44,000 (GST-inclusive) prepaid for advertising by Piece of Time on October 8, 2020 and the recognition of advertising expense for the month of October 2020.

Required:

Complete the Prepaid Advertising 3-column ledger below to find out the amount of advertising expense incurred by Piece of Time in October 2020. GST needs to be accounted for.

Prepaid Advertising
Date	Explanation	Dr ($)	Cr ($)	Balance ($)
01/10/2020	Opening Balance	55,000		55,000 DR
31/10/2020	Closing Balance			74,000 DR

Using the General Journal below, record the additional $44,000 (GST-inclusive) prepaid for advertising and record the advertising expense for the month of October 2020 following the completion of Prepaid Advertising 3-column ledger above. GST needs to be accounted for. Narrations are not required.

Date	Account titles (Details)	Dr ($)	Cr ($)

Answer 1

Answer :

Journal Entries
Date	Account titles (Details)	Dr	Cr
08.10.2020	Pre Paid Advertising Expense A/c - Dr	44,000
	To Cash A/c		44,000
31.10.2020	Advertising Expense A/c - Dr	25,000
	To Pre Paid Advertising Expense A/c		25,000
	(Note : No Input Tax Credit for GST paid on expenses incurred on promotional schemes)
31.10.2020	Profit & Loss A/c - Dr	25,000
	To Advertising Expense A/c		25,000

Workings:
Pre Paid Advertising Expense A/c
Particulars	Amt	Particulars	Amt
To Bal B/d	55,000	By Advertising Expense (P&L)	25,000
To Cash	44,000	By Bal C/d	74,000
	99,000		99,000