Question

- Your answer is partially correct. On July 1, 2020, Monty Co. pays $15,420 to Flounder Insurance Co.for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Monty Co., journalize the entry on July 1 and the adjusting entry on December 31. (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 for the amounts. Record journal entries in the order presented in the problem.) Account Titles and Explanation Debit Credit Date July 1 Cash 15420 Unearned Service Revenue 15420 Dec. 31 V Unearned Service Revenue 15420 Service Revenue 15420

Answer 1

Req a.
S.no.	Accounts title and explanations		Debit $	Credit $
01-Jul	Prepaid insurance			15,420
	Cash account				15,420
	(for payment of insurance premium)
31-Dec	Insurance expense (15,420*6/36)	2,570
	Prepaid insurance				2,570
	(for insurance premium expired for 6 months)
Req b.
S.no.	Accounts title and explanations		Debit $	Credit $
01-Jul	Cash account			14,760
	Unearned service revenue			14,760
	(for premium received in advance)
31-Dec	Unearned service revenue		2,460
	Service revenue (14,760*6/36)		2,460
	(for premium recognized as income for expired period)