In January, a company pays for advertising space in the local paper for ads to be run during the months of January, February, and March at $1,500 a month. The payment would be recorded in January as a:
A) debit of $4,500 to Cash, a credit of $1,500 to Advertising Expense, and a credit of $3,000 to Prepaid Advertising.
B) debit of $4,500 to Accounts Payable and a credit of $4,500 to Cash.
C) debit of $4,500 to Accounts Payable and a credit of $4,500 to Stockholders' Equity.
D) debit of $1,500 to Advertising Expense, a debit of $3,000 to Prepaid Advertising, and a credit of $4,500 to

Question

Quizplus · Accepted Answer

The payment is recorded as a debit to Advertising Expense for the current month's expense, a debit to Prepaid Advertising for future months, and a credit to Cash for the total payment.

In January, a Company Pays for Advertising Space in the Local