msullivan12@ec.rr.com

How do I record this entry?


Paid $200 for Advertising on Account

Paid $200 for Advertising that was on Account

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Hi!

When you incur an expense 'on account', this means you make the purchase with the agreement that you will pay the bill within a certain time frame, usually 30 days.

To do this, you use a liability account called "Accounts Payable". This account will hold all of your bills that you owe for things purchased 'on Account'.

So, if you purchase Advertising - such as placed a newspaper ad, or bought ad space on a website - you would incur an advertising expense, and also an Account Payable.

Here's the journal entry:

Advertising Expense...........$200

Accounts Payable........................$200



When the 30 days is up, and you pay that bill, you would make another journal entry to remove the $200 from Accounts Payable, and also to record the use of cash.

Like this:

Accounts Payable.........$200

Cash in Checking...................$200



Hope that helps!

Kathy

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