174 Chapter 4 The Accounting Cycle: Accruals and Deferrals LO4-1, LO4-2, LO4-3,L04-4, Carnival Corporation & PL.C is one of the world's largest cruise line companies. Its printin 04.5, L04.6, LO4.7 EXERCISE 4.4 Preparing Adjusting Entries are later converted to Cruise Revenue as voyages are completed to Convert an Asset to an costs for brochures are initially recorded as Prepaid Advertising and are later charged to Adver tising Expense when they are mailed. Passenger deposits for upcoming cruises are considered unearned revenue and are recorded as Customer Deposits as cash is received. Deposited amounts Where in its financial statements does Carnival Corpoartion& PLC report Prepaid Advertis- ing? Where in its financial statements does it report Customer Deposits? a. Expense and to Convert a Liability to Revenue b. Prepare the adjusting entry necessary when brochures costing $2.4 million are mailed c. In its most recent annual report, Carnival Corporation & PLC reported Customer Deposits of $3.3 billion. Prepare the adjusting entry necessary in the following year as $48 million of this amount is earned d. Consider the entire adjusting process at Carnival Corporation & PLC. Which adjusting entry do you think results in the most significant expense reported in the company's income statement