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Journal Entry: Paid 300 for three months of advertising on a website. The ad will run...

Journal Entry: Paid 300 for three months of advertising on a website. The ad will run from December 15 to March 15 Adjusting Entry: Compute and record the advertising expense for the month of december. As always, pay careful attention to all dates    Debit- Pre paid insurance expense 300 and Credit- cash 300 for the journal entry. Can you help me with the adjusting entry?

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Homework Answers

Answer #1

Total number of days for which insurance is taken

= December (31 – 14) + January (31) + February (28) + March (15)

= 91 days

Insurance expenses will be from December 15 to December 31 = 17 days

Prepaid insurance will be for (91 – 17) = 74 days

Insurance expense

= Amount paid x Expense days / Total days

= $300 x 17 / 91

= $56

Prepaid insurance

= Total amount paid – Expenses

= $300 - $56

= $244

Journal Entry

Insurance Expenses       $56

Prepaid Insurance        $244

             Cash                             $300

(Being insurance expenses incurred and prepaid insurance recorded)

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