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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.

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Answer:

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

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.

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