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On June 30, Lord Baltimore, Inc. paid Denver Insurance Company $40,000 for one year’s worth of insurance. What is the adjusting entry that should be recorded by Denver Insurance Company on December 31, after 6 of 12 months of insurance had expired? Group of answer choices

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abiolataiwo2015

Answer:

Dr Unearned revenue, $20,000

Cr Revenue, $20,000

Explanation:

Based On the information given if on June 30, the company paid Denver Insurance Company the amount of $40,000 for one year’s worth of insurance. Which means that adjusting entry that should be recorded by Denver Insurance Company on December 31 will be

Dr Unearned revenue, $20,000

Cr Revenue, $20,000

($40,000*6/12)

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