Connect Air completed the following transactions during 2017:
Oct. 15 Paid $10,000 for advertising and promotional material covering the four-month period ending February 15, 2018.
Nov. 1 Received $15,600 payment in advance for a series of charter flights. Revenue of $2,600 will be earned each month over the six-month period ending April 30, 2018.
Required
1. Open T-accounts for Advertising Expense, Prepaid Advertising, Unearned Flight Revenue, and Flight Revenue.
2. Journalize these entries by debiting an asset account for Prepaid Advertising and by crediting a liability account for Unearned Flight Revenue. Explanations are not required.
3. Journalize the related adjustments at December 31, 2017.
4. Post the entries to the T-accounts and show their balances at December 31, 2017. Posting references are not required.
5. Repeat Requirements 1 through 4. This time debit Advertising Expense instead of Prepaid Advertising, and credit Flight Revenue instead of Unearned Flight Revenue.
6. Compare the account balances in Requirements 4 and 5. They should be equal.