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6 October, 11:47

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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  1. 6 October, 15:01
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    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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