What is the adjusting entry for unrecorded invoices?
It is important to understand which period invoices relate to and not the date of the invoice or when the invoice is received. For example, if a company received 4 invoices totaling $55,000 in Year 5 that relate to advertising services for Year 4, then the full $55,000 would need to be recorded in the Year 4 financial statements.
To record the adjusting entry, the company would debit advertising expense for $55,000 and credit accounts payable for $55,000. The invoices would be removed from accounts payable in Year 5 when the company pays them.
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