Question

On July 1, 2017, Sandhill Co. pays $16,500 to Pharoah Company for a 2-year insurance contract. Both Companies have fiscal years ending December 31.

a) Journalize the entry on July 1 and the adjusting entry on December 31 for Pharoah Company. Pharoah 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.)

B) Post the entry on July 1 and the adjusting entry on December 31 for Pharoah Company. (Post entries in the order of journal entries presented in the previous part.)

Brief Exercise 4-7 (Part Level Submission) On July 1, 2017, Sandhill Co. pays 516,500 to Pharoah Company for a 2-year insurance contract. Both companies have fiscal years ending December 31. Your answer is correct. Journalize the entry on July 1 and the adjusting entry on December 31 for Pharoah Company. Pharoah 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 o for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit July 1 v Cash 16500 Unearned Service Revenue 16500 Dec. 31 Unearned Service Revenue 4125 Service Revenue 4125 SHOW LIST OF ACCOUNTS SHOW SOLUTION SHOW ANSWER LINK TO TEXT INTERACTIVE TUTORIAL Attempts: 1 of 3 used (b) your answer is partially correct. Try again. Post the entry on July 1 and the adjusting entry on December 31 for Pharoah Company. (Post entries in the order of journal entries presented in the previous part.) Unearned Service Revenue 12/31 4125 | 7/1 16500 V 12/31 Bal. 4125 Service Revenue 12/31 4125 SHOW LIST OF ACCOUNTS LINK TO TEXT INTERACTIVE TUTORIAL

Answer 1

Solution:- A. Journal Entry Date Particulars Debit[$] Credit[$] July 7 Cash A/c Dr. $16,500 To Unearned Service Revenue A/c $16,500 July 31 Unearned Service Revenue A/c Dr. $4,125 To *Service Revenue A/c $4,125 *Service revenue = $16,500 × [6 Months ÷ 24 Months] = $4,125 B. T-accout Unearned Service Revenue Date Particulars Amount($) Date Particulars Amount($) 12/31 To Service Revenue A/c 4,125 7/1 By Cash A/c $16,500 12/31 To Balance C/d (Bal. Fig.) $12,375 $16,500 $16,500 Service Revenue Date Particulars Amount($) Date Particulars Amoun($) 12/31 By Unearned service Revenue A/c $4,125