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bpn2017
Level 2

Prepaid Expenses

I do the bookkeeping for a small service company.  The owner paid $1500 for advertising that was going to run for 3 months.  Accountant mentioned doing journal entries to account for $500 advertising expense each month to keep the P&L accurate.  The owner only paid minimums on the credit card for several months and just paid the credit card off in full (which included other expenditures).  How should that payment in full be coded?  Do I code the $1500 payment as prepaid expense? 

1 Comment 1
Teri
Level 9

Prepaid Expenses

Charge $1500 payment to Prepaid Expense (Asset account) and then do J/E to move 1/3 each month to Advertising expense account. 

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