Question

Question 5 --/2 View Policies Current Attempt in Progress On July 1, 2017, Ling Co. pays $18,240 to Blue Spruce Corp. for a 2-year insurance contract. Both companies have fiscal years ending December 31. For Blue Spruce Corp., enter the July 1 transaction and the December 31 adjustment in the tabular summary that follows. (If a transaction results in a decrease in Assets, Liabilities or Stockholders' Equity, place a negative sign (or parentheses) in front of the amount entered for the particular Asset, Liability or Equity item that was reduced.) Assets Liabilities Stockholders' Equi + Com. + Cash Unearned Serv. Rev. Stock + Rev. Jul. 1 Dec. 31 Bal.

Answer 1

Service revenue for 2 years = $18,240

Service revenue for 6 months ( From July to December) = 18,240 x 6/24

= $4,560

	Assets	=	Liabilities	+	Shareholders Equity
							Retained Earnings
	Cash	=	Unearned Service Revenue	+	Common Stock	+	Revenues	-	Expenses	-	Dividend
Jul.1	18,240	=	18,240	+		+		-		-
Dec.31		=	-4,560	+		+	4,560	-		-
Bal.	$18,240	=	$13,680	+		+	$4,560	-		-

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