In January,a company pays for advertising space in the local paper for ads to be run during the months of January,February,and March at $1,500 a month.The payment would be recorded in January as a:

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The payment of $4,500 ($1,500 x 3 months) for advertising space in the local paper is for the months of January, February, and March. Since the company has not yet received the benefit of the ads for February and March, the payment is recorded as a prepaid expense. Therefore, the payment would be recorded in January as a debit of $1,500 to Advertising Expense (for the expense incurred in January), a debit of $3,000 to Prepaid Advertising (for the future expenses incurred in February and March), and a credit of $4,500 to Cash. Option D correctly reflects this.

In January,a Company Pays for Advertising Space in the Local