Prustate Insurance Company collected $240,000 from Jacobs Printing Corporation for a two-year fire insurance policy on May
Question:
Prustate Insurance Company collected $240,000 from Jacobs Printing Corporation for a two-year fire insurance policy on May 31, 2011. The policy is in effect from June 1, 2011, to May 31, 2012.
REQUIRED:
a. Assume that Prustate Insurance Company recorded the $240,000 cash collection as a liability on May 31, 2011.
1. Prepare the entry to record the cash collection.
2. Prepare the adjusting entry necessary on December 31, 2011.
3. What was the purpose of the adjusting journal entry on December 31, 2011?
4. Complete a chart like the following:
_____________________________________2011 2012 Total
Insurance revenue
Cash receipts associated with insurance
b. Assume that Jacobs Printing Corporation recorded the $240,000 cash payment as an asset on May 31, 2011.
1. Prepare the entry to record the cash payment.
2. Prepare the adjusting entry necessary on December 31, 2011.
3. What was the purpose of the adjusting journal entry on December 31, 2011?
4. Complete a chart like the following:
_____________________________________2011 2012 Total
Insurance revenue
Cash receipts associated with insurance
CorporationA Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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