Question 1 On July 1, 2017, Major Co. pays $12,000 to Cruz Insurance Co. for a 3

Question

Question 1 On July 1, 2017, Major Co. pays $12,000 to Cruz Insurance Co. for a 3-year insurance contract. Both companies have fiscal years ending December 31. Journalize and post the entry on July 1 and the adjusting entry on December 31 for Cruz Insurance Co. Cruz uses the accounts Unearned Service Revenue and Service Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Credit Service Revenue

Explanation / Answer

Date Accounts Titles and explanations Debit $ Credit $ 1-Jul Cash Account Dr. 12,000      Unearned Revenue Account 12,000 31-Dec Unearned Revenue Account Dr. 2000       Service revenue 2000 (for service revenue recognized for 6 months expired period) UNEARNED REVENUE Dec 31 Service revenue 2,000 July 1 Cash Account 12,000 Dec 31 balance 10,000 SERVICE REVENUE Dec31 Unearned revenue 2,000 Dec 31 Balance 2000

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