You have recently been employed by a large retail chain that sells sporting goo

You have recently been employed by a large retail chain that sells sporting goods. One of your tasks is to help prepare periodic financial statements for
external distribution. The chain%u2019s largest creditor National Savings & Loan requires quarterly financial statements and you are currently working on
the statements for the three-month period ending June 30 2006.During the months of May and June the company spent $1200000 on a large radio and TV advertising
campaign. The $1200000 included the costs of producing the commercials as well as the radio and TV time purchased to run the commercials. All of the costs were
charged to advertising expense. The company%u2019s chief financial officer (CFO) has asked you to prepare a June 30 adjusting entry to remove the costs from
advertising expense and to set up an asset called prepaid advertising that will be expensed in July. The CFO explained that %u201CThis advertising
campaign has produced significant sales in May and June and I think it will continue to bring in customers through the month of July. By recording the ad costs as
an asset we can match the cost of the advertising with the additional July sales. Besides if we expense the advertising in May and June we will show an
operating loss on our income statement for the quarter. The bank requires that we continue to show quarterly profits in order to maintain our loan in good
standing.%u201D What is your course of action and recommendation??