Darla Documentation,paid $1,900 to the local newspaper for advertising that will begin in 30 days and continue for the following 6 weeks.How would Darla Documentation record this transaction?
A)Debit Cash and credit Advertising Expense for $1,900
B)Debit Prepaid Advertising and credit Advertising Expense for $1,900
C)Debit Advertising Expense and credit Prepaid Advertising for $1,900
D)Debit Cash and credit Prepaid Advertising for $1,900
E)Debit Prepaid Advertising and credit Cash for $1,900

Question

Quizplus · Accepted Answer

Since the advertising will begin in 30 days and continue for 6 weeks, the payment is for a future service. Therefore, it should be recorded as a prepaid expense. The correct entry is to debit Prepaid Advertising and credit Cash for $1,900, reflecting the payment made now for future advertising services.

Darla Documentation,paid $1,900 to the Local Newspaper for Advertising That