Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15.00 a share. This stock was originally issu

Response:

advertising expense 387 debit

prepaid expense 387 credit

--to document expired advertising at the year's end ---

Details:

1,548 represents the value over 36 months

From April to December 31, 9 months have elapsed thus:

1,548 x 9/36 = 387 expired advertising

We will reduce our prepaid account and record the advertising expense for the expired amount

The prepaid expense is classified as an asset since it grants us the right to receive advertising for our product and brand during the contract period. Therefore, we credit it to decrease it

while the expense will debit our equity

Response:

D

Justification:

Answer:

A. Dr Amortization expense $43,750

Cr Patents $43,750

B. Dr Amortization expense $5,230

Cr Patents $5,230

C. Dr Amortization expense $14,000

Cr Franchises $14,000

Explanation:

Journal entry preparations

A. Dr Amortization expense $43,750

($350,000÷8 years = $43,750)

Cr Patents $43,750

(Recording amortization for the patent)

B. Dr Amortization expense $5,230

($52,300÷10 years = $5,230)

Cr Patents $5,230

(Recording amortization for the patent)

C. Dr Amortization expense $14,000

($70,000÷5 years = $14,000)

Cr Franchises $14,000

(Recording amortization for franchises)