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Problem #$1$: Revenues, Expenses, and Related Items $(18$ points$)$

Presented below are three scenarios that describe transactions involving revenues, expenses and cash flows.

The scenarios are followed by questions about the presentation of the transactions in the GAAP financial

statements. Write your answers to the questions in the spaces provided.

Scenario #$1$: Ezra Industries $(6$ points$)$

On May $16,2024,$ Ezra Industries hired Mendes Marketing Solutions to provide advertising and other

marketing services for a monthly fee of $$4,700.$

$8$ Months

During $2024$ Ezra Industries used the monthly services provided by Mendes Marketing Solutions from May

$1$ through December $31.$ Ezra Industries paid cash of $$28,200$ to Mendes Marketing Solutions during $2024.$

Required:

Determine the amounts of the following items that Ezra Industries reported in its $2024$ GAAP financial

statements relative to the service contract with Mendes Marketing Solutions. Indicate the statement in

which the item appeared by writing its reported amount in the corresponding box.

$(2$ points per amount $=6$ points$)$

Amount

a$)$

How much advertising expense, if any, was Ezra Industries required

to recognize in its $2024$ GAAP income statement from its

arrangement with Mendes Marketing Solutions?

SUPPORTING COMPUTATION REQUIRED:

b$)$

What amount, if any, was reported as prepaid advertising to Mendes

Marketing Solutions by Ezra Industries in its GAAP balance sheet at

December $31,2024?$

c$)$

What amount, if any, was reported as advertising payable to Mendes

Marketing Solutions by Ezra Industries in its GAAP balance sheet at

December $31,2024?$

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