On July 1, 2017, Wildhorse Co. pays $ 19,500 to Blossom Company for a 2-year ins

Question

On July 1, 2017, Wildhorse Co. pays $ 19,500 to Blossom Company for a 2-year insurance contract. Both companies havefiscal ears ending December3 Your answer is correct. For Wildhorse Co., journalize the entry on July 1 and adjusting entry on December 31. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 19500 July 1 Prepaid Insurance 19500 Cash 4875 Dec. 31 Insurance Expense 4875 Prepaid Insurance

Explanation / Answer

Journal entry :

T-Account

Date account and explanation debit credit July 1 Prepaid insurance 19500 Cash 19500 Dec 31 Insurance expense (19500*6/24) 4875 Prepaid insurance 4875

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