How to Record Newspaper Advertising Services Transaction?

Question:

A company received a bill for newspaper advertising services, $440. The bill will be paid in 10 days. How would the transaction be recorded today?

A) debit advertising expense $440, credit cash $440

B) debit accounts payable $440, credit cash $440

C) debit advertising expense $440, credit accounts payable

D) $440 debit accounts payable $440, credit advertising expense $440

Answer:

The correct transaction to record today for the company that received a bill for newspaper advertising services of $440 to be paid in 10 days is debit advertising expense $440, credit accounts payable $440.

It is given that a company received a bill for newspaper advertising services, $440. The bill will be paid in 10 days. In order to record the transaction today, the advertising expense will be debited for an amount of $440. The accounts payable will be credited for an amount of $440.

This is because the company has incurred the advertising expense but has not yet paid for it, so they will record the amount as a liability in accounts payable.

Hence, the correct option for the given transaction is C: debit advertising expense $440, credit accounts payable $440.