XSIQ
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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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