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Advertisement exp.

CHAITRI SUDHAKARBHAI KHAROD (ARTICLE) (752 Points)

04 April 2020

If advertisement exp is rs 12000 and 50% is carried forward to the next year...then what is the journal entry??
advertisement exp Dr 6000
to advertisement exp payable a/c 6000

is this correct ???

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14 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

Is this correct ???

- No.

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satish (teaching) (2046 Points)
Replied 04 April 2020

As per companies act 2013 advertisement experience can be considered as revenue expenditure.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

@ Mr Satish.,

Yes... You are correct.

But,
Some of the service will give yearly basis and amount will be collect advance basis...

satish (teaching) (2046 Points)
Replied 04 April 2020

Yes. in that case as per the agreement current year expenditure is debited to profit and loss a/c. next year advertisement expenditure which is paid in advance is considered as expenditure paid in advance.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

Yes... I agreed to You.
Can it it's accounted as "PREPAID EXPENSES" to next year.

But,

I ask correct details from Querist.
Bcoz, some times after our standard reply Querists ask wrongly. So, Only I ask sometimes details.

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CHAITRI SUDHAKARBHAI KHAROD (ARTICLE) (752 Points)
Replied 04 April 2020

Ok. ...Means entry will be...

prepaid exp on advertisement a/c Dr 6000
to advertisement exp. a/c 6000....

right????

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

May be...
But,
It's based on its periods...

CHAITRI SUDHAKARBHAI KHAROD (ARTICLE) (752 Points)
Replied 04 April 2020

May it be revenue or deffered revenue exp...???

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

Yes...
Balance (which is not accountable in the same FY) amount is "differed revenue" expense.

But,
Divide as per period of use...

Spurto Consultancy Services (Consultant) (1891 Points)
Replied 04 April 2020

If the advertisement expense is in the form of a license at some marketing agency then you can make pre and post expenditure.

Advertisement expense A/c Dr.

Prepaid Advertisement expense A/c Dr.

To Advertisement expenses payable A/c Cr.

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

Advertisement expense A/c Dr.

Prepaid Advertisement expense A/c Dr.

To Advertisement Agency a/c

Aj Style (Student) (348 Points)
Replied 04 April 2020

Case 1 - Advt. exp is 12000 belongs to 1 FY and only 6000 has been paid :-

Advertisement exps A/c dr. 12000
to bank Account 6000
to advertisement o/s or payable 6000

2. if 6000 exps belong to next Fy and you had paid 12000

Advertisement exps dr 6000
advertisement prepaid account 6000
to bank account -12000

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 04 April 2020

No...

Any of the expenses which is in the current year (say march) and the payment will be payable in next month (say Apr) then only will be prepare provisional entry...

Provisional entry (as payable) can't be future expenses...
So,
Payable entry is wrong as per query. Here payment expenditure will be split as per usage. Not for payments to suplier...