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On July 1, Crowe Co. pays $15,000 to Zubin Insurance Co. for a 3-year insurance policy. Both companies have fiscal years ending December 31. For Crowe Co., journalize the entry on July 1 and adjusting entry on December 31.Using the above data, journalize the entry on July 1, and the adjusting entry on December 31 for Zubin Insurance Co. Zubin uses the accounts Unearned Service Revenue and Service Revenue.

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hyderali230

Answer:

For Crowe Co

                                    Dr.          Cr.

July 1

Prepaid Insurance   $15,000

Cash                                        $15,000

December 31

Prepaid Expense   $2,500

Prepaid Insurance                  $2,500

For Zubin Insurance Co.

                                                     Dr.             Cr.

July 1

Cash                                         $15,000

Unearned Service Revenue                  $15,000

December 31

Unearned Service Revenue   $2,500

Service Revenue                                    $2,500

Explanation:

Insurance Expense / Service Revenue on December 31 = 15,000 x ( 6 / 36 )

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