Question

An insurance company received advance payments from clients during 2019 of $12,000. At December 31, 2019,...

An insurance company received advance payments from clients during 2019 of $12,000. At December 31, 2019, $10,000 of the advance payments still had not been earned. After the adjustments are recorded and posted at December 31, 2019, what will the balances be in the Unearned Insurance Revenue and Insurance Revenue accounts?

Unearned Insurance Revenue Insurance Revenue

a.

$10,000 $2,000
b.

$10,000 $10,000
c.

$0 $12,000
d.

$2,000 $10,000
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Homework Answers

Answer #1

Answer : $10000 , $2000

Explanation:  In the beginning when cash is received ,the journal entry will be

Cash A/c 12000
Unearned insurance revenue A/c 12000

2. When insurance revenue is earned : journal entry

Unearned insurance revenue A/c 2000
Insurance revenue A/c 2000

Balances :

unearned insurance revenue (12000-2000) = 10,000

Insurance revenue = 2000

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