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    Adjusting entries

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    As of December 31, International Galleries, Ltd.'s general ledger account for Prepaid Advertising Expense had a balance of $10,000. However, an analysis of the account showed that $6,000 of that amount was for ads in the Daily Tribune newspaper that had been published during December. As of December 31, Tribune Newspaper Publishing, Inc.'s general ledger account for Unearned Advertising Revenue had a balance of $8,000. However, an analysis of the account showed that $6,000 of that amount was for International Galleries' ads that had been published during December.

    Which of the following adjusting entries would be appropriate on International Galleries' books?

    1. Debit Prepaid Advertising Expense for $6,000.
    2. Debit Advertising Expense for $6,000.
    3. Credit Advertising Expense for $6,000.
    4. None of the above.

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    Solution Summary

    Solution discusses the adjusting entries

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