Brief Exercise 3-4 On July 1, 2017, Splish Co. pays $14,760 to Blossom Insurance

Question

Brief Exercise 3-4 On July 1, 2017, Splish Co. pays $14,760 to Blossom Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. Journalize the entry on July 1 and the adjusting entry on December 31 for Blossom Insurance Co. Blossom uses the accounts Unearned Service Revenue and Service Revenue. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit

Explanation / Answer

1-Jul Cash 14760       Unearned Service Revenue 14760 31-Dec Unearned Service Revenue 2460 =14760/3*0.5        Service Revenue 2460 2 1-Jul Prepaid insurance 10480        Cash 10480 31-Dec Insurance expense 2620 =10480/2*0.5       Prepaid insurance 2620

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