On June 1, 2018, Superior Insurance Company collected $490,000 for a 2-year insurance policy beginning on...
On June 1, 2018, Superior Insurance Company collected $490,000 for a 2-year insurance policy beginning on the same date. The company has a December 31 year end. What is the balance of the unearned revenue account after adjusting entries on December 31, 2018?
A. $142,917
B. $245,000
C. $347,083
D. $102,083
Homework Answers
Answer
- After 31 Dec 2018 adjusting entries, 7 month revenue would have been adjusted as ‘Earned’ [7 months = From 1 June to 31 Dec]
- Unearned Revenue account will now have the balance for 17 months [24 months – 7 months earned]
- 17 Month’s unearned Revenue = $ 490000 x 17/24
= $ 347,083 - Correct Answer = Option ‘C’ $ 347,083
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