On July 1, 2010, Spahn Co. pays $18,000 to Randle Insurance Co. for a 3-year ins

Question

On July 1, 2010, Spahn Co. pays $18,000 to Randle Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. Prepare the journal entry on July 1 and the adjusting entry on December 31 for Randle Insurance Co. Using T accounts, enter the balances in the accounts below, post the adjusting entry as necessary, and indicate the adjusted balance in each account. (If there is no transaction, enter NA as the date and 0 for the amount. Do not leave any fields blank.)

Explanation / Answer

For Randle Ins co. It is like a product Sale.
1 Jul 2010 Cash Dr 18000
Unearned Insurance Rev Cr 18000
(To record 3 year Insurance sale to Spahn for $18000)

31 Dec 2010 Unearned Insurance Rev Dr 6000
Insurance Revenue Cr 6000
(To record expiry of Insurane lIability for Year 2010)
In Randle co Bal sheet, Balance $12000 will appear as Liability

If I succeeded in helping you then please rate me 5 stars first (before you rate anyone else)

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.