Using the data in BE3.5, journalize and post the entry on July 1 and the adjusting entry
Question:
Using the data in BE3.5, journalize and post the entry on July 1 and the adjusting entry on December 31 for Mesa Insurance Co. Mesa uses the accounts Unearned Service Revenue and Service Revenue.
BE3.5
On July 1, 2019, Major Co. pays $15,120 to Mesa Insurance Co. for a 4-year insurance contract. Both companies have fiscal years ending December 31. For Major Co., journalize and post the entry on July 1 and the annual adjusting entry on December 31.
Step by Step Answer:
July 1 Cash 15120 Unearned Service Revenue 15120 ...View the full answer
Accounting Principles
ISBN: 978-1119411482
13th edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso
Related Video
Unearned revenue is money received by an individual or company for a service or product that has yet to be provided or delivered. It can be thought of as a \"prepayment\" for goods or services that a person or company is expected to supply to the purchaser at a later date. As a result of this prepayment, the seller has a liability equal to the revenue earned until the good or service is delivered. This liability is noted under current liabilities, as it is expected to be settled within a year.
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