XSIQ
*
Accounting - Recording prepaid and accrued revenue and expenses in the
general journal and ledger
Recording prepaid and accrued revenue and expenses in the general journal
and ledger
In this example, $3000 advertising has been paid on 1 January 2000 for
ten advertisements in a magazine. At the end of the accounting period,
three months later, only seven advertisements have been placed.
The prepaid expense is a current asset.
You will have to be able to record in both the general journal and ledger,
showing the adjusting, closing and reversing entries.
DATE
ACCOUNTS
DEBIT
CREDIT
31 Mar.
Prepaid advertising
900
Advertising
900
Advertising paid in advance
31 Mar.
Profit and Loss a/c
2 100
Advertising
2 100
Advertising posted to Profit and Loss a/c
1 Apr.
Advertising
900
Prepaid advertising
900
Reversing entry
31 Mar.
Bank
3 000
31 Mar.
Prepaid advertising
900
Profit and Loss a/c
2 100
3 000
3 000
1 Apr.
Prepaid advertising
900
31 Mar.
Advertising
900
1 Apr.
Advertising
900
31 Mar.
Advertising
2 100
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