CPA Bonus Question #2: On October 31, Year 1, a company with…
CPA Bonus Question #2: On October 31, Year 1, a company with a calendar year end paid $90,000 for services that will be performed evenly over a 6-month period from November 1, Year 1, through April 30, Year 2. The company incorrectly expensed the entire $90,000 on October 31, Year 1. The company did not record any additional journal entries related to this transaction throughout the rest of Year 1. What is the adjusting journal entry that that the company should record to properly report the effects of the prepayment in its Year 1 financial statements?