October 30, 2016 admin

Prepaid Expenses—Advertising

Assets

PREPAID EXPENSES—ADVERTISING ASSET ACCOUNT
1500

ACCOUNT EXPLANATION
Advertising expenditures made in advance that apply to future accounting periods.
TRANSACTIONS
  Jrnl. Dr. Cr.
  Three-month spot new car radio contract paid in advance CD
    Prepaid Advertising 1500
      Cash in Bank—General 1001
             
  Monthly write-off of prepaid spot radio contract SE
    Advertising—New 7110
      Prepaid Advertising 1500
COMMENTS
  • A subsidiary record, such as Form FMC 61, Prepaid and Accrued Expense Schedule, should support this account, and should be used in computing monthly write-offs to expense.
  • Dealer advertising fund assessments on the factory invoice are part of the vehicle cost and should be charged to the appropriate new vehicle inventory account.