Question

On Feb. 28, a company pays for advertising space in the local paper for ads to be run during the months of Feb, March, and April at $1,500 a month. The payment would be recorded on Feb. 28 as a______________

Answer 1

The payment made by the company for advertising space in the local paper is recorded as a prepayment on Feb. 28.

Step-by-step explanation:

The payment made by the company for advertising space in the local paper is recorded on Feb. 28 as a prepayment or an accrued expense. In this case, since the company pays for ads to be run during the months of Feb, March, and April, the $1,500 payment made on Feb. 28 would be recorded as a prepayment. This means that the company has paid in advance for the advertising services to be received in the future.