In which month should advertising costs be expensed

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Reference no: EM132562020

Question - A furniture company using accrual accounting purchased 20 sofas in November 2011. In December 2011, 8 of the 20 sofas were sold to customers. The customers all signed contracts agreeing to pay half the amount owed in February 2012 and the remaining half in March 2012.

At the time of sale, the company was reasonably sure the customers would pay the amount owed. The furniture company pays its salespeople a commission on each sofa sold, with commissions for December 2011 sales paid in January 2012.

The furniture company paid $3,000 for advertising that ran in the local newspaper in November 2011.

In which month should advertising costs be expensed?

Reference no: EM132562020

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