On July 1, 2017, Major Co. pays $28,800 to Cruz Insurance Co. for a 3-year insur

Question

On July 1, 2017, Major Co. pays $28,800 to Cruz Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. For Major Co.,journalize and post the entry on July 1 and the annual adjusting entry on December 31. (Credit account titles are aut entered. Do not indent manually. Record journal entries in the order presented in the problem.) account titles are automatically indented when the amount is Date Account Titles and Explanation Debit Credit uly 1Prepaid Insurance 28000 Cash 28000 Dec. 31 Insurance Expense Prepaid Insurance Prepaid Insurance 12/31 Bal. Insurance Expense

Explanation / Answer

Date Account titles and Explanation Debit Credit 1-Jul Prepaid insurance 28,800 Cash 28,800 31-Dec insurance expense 4800 prepaid insurance 4,800 (28800/36)*6 Prepaid insurance 1-Jul 28,800 31-Dec 4,800 12/31 bal 24,000 insurance expense 31-Dec 4,800 Date Account titles and Explanation Debit Credit 1-Jul cash 28,800 unearned service revenue 28,800 31-Dec unearned service revenue 4800 service revenue 4,800 (28800/36)*6 unearned service revenue 31-Dec 4,800 1-Jul 28,800 24,000 12/31 bal 24,000 insurance expense 31-Dec 31-Dec 4,800

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