Question

On July 1, 2017, Carla Vista Co. pays $16,000 to Sheridan Company for a 1-year insurance contract. Both companies have fiscal years ending December 31.

Journalize the entry on July 1 and the adjusting entry on December 31 for Sheridan Company. Sheridan uses the accounts Unearned Service Revenue and Service Revenue. (Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Post the entry on July 1 and the adjusting entry on December 31 for Sheridan Company. (Post entries in the order of journal entries presented in the previous part.)

Answer 1

Journal entry

Date	account and explanation	Debit	Credit
July 1	Cash	16000
	Unearned revenue		16000
Dec 31	Unearned revenue (16000*6/12)	8000
	Service revenue		8000

T account

Unearned revenue
Dec 31	8000	July 1	16000
		Dec Bal	8000
Service revenue
		Dec 31	8000
		Dec 31 Bal	8000