Australia Competition Prize

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Competition Prize: Which Expense Account to Debit?

Hi

Our business is running a competition for the first time, and the competition prize varies from $60 to $40,000 (some are promotional items, some are cash).

My question is, what does the accounting entry look like when we pay cash to the winners? I know we simply credit the bank (cash) , but which expense account do I debit?

Thank you,

Raeka
 
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kirby

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You are running this competition to attract business to your company. So use an expense account in the "Marketing" category. If the prizes are indeed large you may choose to open a specific acct such as "Marketing expense-Competition Prizes"
 

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