The company paid $3,700 on January 1 of the current year to have advertisements placed in...

The company paid $3,700 on January 1 of the current year to have advertisements placed in the local monthly neighborhood paper. The ads were to be run from January through June. The bookkeeper debited the full amount to Prepaid Advertising on January 1. 1.Record the adjusting entry for advertisements at March 31 of the current year. 2.Record the adjusting entry for the use of construction equipment during of the current year.

Expert Solution

Entry for the advertisement for 6 month paid on January 1

As per accounting method the Expanse is recorded which are occurring during the accounting period from April to March

In the present case , Advertisement Exoance for the Six month paid on January for Six month ,in which Three month in the current accounting period and three for the next, Hence we have to record expanse in the year and balance is prepaid advertising Expanse as below

Advertisement Expanse A/c. Dr. 1850

Prepaid advertising Expanse. Dr. 1850

To Cash. A/c. 3700

2. Adjusting entry for use of construction equipment

When we use construction equipment in the business we recorded the expanse of the equipment is our assets or we record the rent expanse if we rented the equipment for the construction work.

Owned equipment

Depreciation a/c. dr. Xxx

To Construction equipment. Xxx

Rented equipment

Rent expanse. a/c. dr. xxx

To. Cash/bank/creditors. a/c. xxxx

ekkarill92 answered 2 years ago

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