Question

Brief Exercise 3-06 On July 1, 2019, Oriole Co. pays $19,500 to Sheffield Insurance Co, for a 4-year insurance contract. Both companies have fiscal years ending December 31. Journalize and post the entry on July 1 and the adjusting entry on December 31 for Sheffield Insurance Co. Sheffield uses the accounts Unearned Service Revenue and Service Revenue. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in problem. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Unearned Service Revenue . . Service Revenue Click if you would like to Show Work for this questioni Open Show Work

Answer 1

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Sheffield	Amount $	Note
Unearned service revenue	19,500.00	A
For years	4.00	B
Yearly amount	4,875.00	C=A/B
Monthly amount	406.25	D=C/12
For 2019, from Jul to Dec (months)	6.00	E
Service revenue for 2019	2,437.50	F=D*E

Journal Entry
Date	Account titles and explanation	Debit $	Credit $
1-Jul	Cash	19,500.00
	Unearned service revenue		19,500.00
31-Dec	Unearned service revenue	2,437.50
	Service revenue		2,437.50

Unearned service revenue
Service revenue	2,437.50	Cash	19,500.00
		Balance bf	17,062.50
Service revenue
Income Summary	2,437.50	Unearned service revenue	2,437.50