Question

On March 15, 2020, Dufrane Co. paid $180,000 for a three-year insurance policy that covers April 1, 2020 through March 31, 2023.

In addition, on March 21, 2020, Dufrane received $75,000 from a customer for a two-month project to be completed equally between May and June. Prepare the initial entries for March 15th and March 21st.

Prepare the adjusting entries needed for March, April, and May 2020 (if any).

Answer 1

Ans: Journal Entries

Date	Account title and explanation	Debit($)	Credit($)
March 15	Prepaid Insurance	180,000
	Cash		180,000
	{ to record insurance paid in advance}
March 21	Cash	75,000
	Unearned revenue		75,000
	{ to record receiving from customer}
April 20	Insurance Expense {180,000/12}	15,000
	Prepaid Insurance		15,000
April 20	Unearned Revenue [75,000/2]	37,500
	Service Revenue		37,500
May 20	Unearned Revenue [75,000/2]	37,500
	Service revenue		37,500